What to know:
- MicroStrategy, that behemoth of bitcoin buying, has conjured up yet another scheme to raise capital for its beloved cryptocurrency – a perpetual preferred stock offering, no less!
- Analysts, those wise and all-knowing sages, believe this newfangled vehicle could be a resounding success, a veritable goldmine of returns.
- BlackRock’s PFF, the largest U.S. ETF focused on preferred stock, boasts a whopping $15 billion in AUM, a sum that would make even the most seasoned capitalist weak in the knees.
MicroStrategy, led by the indefatigable Michael Saylor, has been at the forefront of creatively raising capital to fuel its bitcoin buying binge. And now, with its perpetual preferred stock offering (STRK), the company has opened a new front in its quest for cryptocurrency dominance.
Preferred stock, that mystical creature that dwells between equity and debt on the corporate balance sheet, offers investors the best of both worlds: the regular return of bonds and an ownership stake in the company. A veritable win-win, if you will.
Ben Werkman, a well-followed MicroStrategy analyst, waxed poetic about the allure of preferred stock for institutional investors, citing its lack of maturity risk, stable yield, and optional equity upside. “I could see a scenario where [the preferred stock] starts taking some of the convertible bond space for fixed income accumulation due to the lack of any point in time maturity risk,” he opined.
Jeff Park, head of alpha strategies at Bitwise Investments, was equally effusive in his praise for MSTR’s preferred stock offering, calling it one of the most compelling securities in the market and a next-generation investment vehicle. “STRK is a near-perfect instrument,” he wrote. “It gives you two chances to win: First, when rates go down, it’s a huge boon to the principal, and two, if MicroStrategy goes up first, then you have a deep in-the-money (ITM) option to convert and own the higher volatility asset or just directly sell.”
The largest of the U.S. preferred stock ETFs, BlackRock’s PFF, boasts a staggering $15 billion in assets under management, with major corporations like Boeing, Wells Fargo, and Citi Group among its largest holders.
And so, dear investor, the final pricing terms of this new security will be revealed after the market closes on Thursday. Will you take the plunge and join the bitcoin bonanza, or will you sit this one out? The choice is yours, but one thing is certain: the world of finance will be watching with bated breath.
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2025-01-29 18:42