Yeah, there's nothing perfect out there

...

but they've perfected, we'll call it an algorithm, a mechanical algorithm through str- the structure of society, and it has to do with class, it has to do with, uh, bloodlines or ethnicity, although the, the, the ideas of race have very much clouded what humans used to understand as ethnicity or, you know, maybe even, um, tribal origin, you know, because every country has its tribes.

It's not just the Native Americans or the people on remote islands, right? So, um, this sort of political underpin of, like, genetics 'cause there is a political nature to genetics, um, and, and ethnicity, of course, that has now been kinda conflated to race.

You know, these are, these are the, I don't know, you could call them smoke screens, but it's more like curtains in front of the, the wizard, uh, with his machine, you know, and Dorothy comes and pulls the curtain off, right? So none of it is, is, uh, altogether, um, you know- unobvious.

I hate to, uh, it doesn't really make sense, unobvious, but, um, it's in our faces.

It's hidden in plain sight.

Yeah.

But that could be also done by selling Bitcoin, right? And that was kind of the issue which got everything rolling a couple of weeks ago.

Yeah, unfortunately.

I think that a couple of things that strategy has done of late were either not well received by the market or misinterpreted.

Starting with the fact that the company used a significant portion of the cash reserve backing its perpetual preferreds, in this case $1.5 billion, to buy back that amount of its convertible debt.

Now, stepping back, looking at the big picture, that makes some strategic sense simply because the company had made as a goal getting rid of its existing convertible debt over the next few years so that its entire capital structure would be comprised only of perpetual preferred stock and stretch being at the top of that list.

Which all makes sense because that would effectively be a capital stack comprised of permanent capital.

However, I think one of the learnings for management here was that many investors, retail investors in particular, are more concerned about having more of a runway with regard to that cash reserve.

Michael Saylor and MicroStrategy were very unique in finding those and also the return on capital mechanics that makes those very attractive for MicroStrategy to issue.

The premium.

Uh, again, you know, it's not really about...

You know, because when you, uh, look at the way in which digital asset, uh, re- Treasury companies are measured, it's typically on what's known as MNAV, which is a multiple of the net asset value.

Right now, Strategy is down at about, you know, 1.07 in that measure.

Um, I am not, uh, expecting that MNAV, uh, itself is going to be the driver.

If the price of Bitcoin were to appreciate, then the company's existing Bitcoin holdings, uh, would be the driver.

So, uh, Strategy's just in a, a remarkably strong position if we were to see an increase in the price of Bitcoin.

So it, it just seems to me, again, the leverage inherent in their balance sheet, um, scares me more now than ever, um, rather than the upside of an upside move in Bitcoin.

Talk to me about the types of questions you were getting and, and what you say to people who look at that and pause.

Well, I think that's a, a situation where a bit of context is helpful.

Uh, because it was clearly the case that Strategy had indicated that at some point in 2026, it could sell some Bitcoin, not because it needed to, not specifically so it could fund any of its obligations on its perpetual preferreds or any other instrument, but specifically so it could address, uh, a comment that was made by Standard and Poor's when it came out with its first issuer rating of Strategy last October.

And in that report, Standard and Poor's, uh, said that because management, um, Michael Saylor, had repeatedly stated that Strategy would not sell any Bitcoin, they were not going to give credit to the company for the, you know, at the time, something like $60 billion of Bitcoin that it had, some small amount of which could be sold to address the company's obligations.

So because the company had not sold any, and had indicated that they would not do so, S&P was giving them zero credit for a $60 billion [laughs] pile of Bitcoin.

How do you address that? By demonstrating that you're able to sell and that you would sell.

Nominal amount.

Talk to me about what goes into that.