Bitcoin Treasury Stocks: Sentiment or Structure? Deep Dive with Adrian Morris | SLP749

**Stephan Livera** (0:00)
Hi, everyone, welcome back to Stephan Livera Podcast. Joining me today is Adrian Morris. Adrian is a founding member of True North and an analyst, talking and strategizing and analyzing the mechanics of companies such as Strategy and others in the digital credit market, talking about MNav, Capital Structure, and so on. Adrian, I've been watching some of your work. I found an interesting analysis and obviously had to get you on.
So yeah, I guess welcome to the show. And let's start with, I guess, an obvious question. What do you think some of the skeptics of Bitcoin treasury companies are getting wrong right now?

**Adrian Morris** (0:34)
Well, when it comes to strategy, I think one of the biggest misconceptions is that they're somehow in some immediate peril because of what's going on in the market. But the reality is that these treasury companies, whether it be strategy, meta-planets, so on, are very much Bitcoin-adjacent and Bitcoin-dependent. So as Bitcoin's price goes down, obviously their capital structures will experience stress.
And I think that's coloring much of the commentary around these companies right now. I also think a lot of it is tied to just being blunt, engagement farming. It is very easy to pile on to strategy in these companies when the market is down. But when they're running up, the commentary shifts to, well, they shouldn't be this expensive. So it's always a shifting goalpost, and I think it always is a narrative feeding goalpost. So one of the first things I think people are getting wrong is that these companies are in imminent distress. At least in the case of strategy, that is not true.
One of the other things that I think these companies are getting wrong is that they don't seem to understand what the true, in my view, what the true motivation for a company like strategy is. I still fundamentally view it as an enterprise is exchanging one form of capital for another.
And they're doing that through share issuance on MSDR, through share issuance on the common, on the preferred equities. And they're doing that to acquire Bitcoin, which is growing the company's overall net asset value or enterprise value, whichever measure you want to use, that then allows them to go to the capital markets. And since the capital markets are using these equities, again, in my view, as a forward-looking barometer for where they think Bitcoin is going, where when they think Bitcoin is going to go up, and Bitcoin should appreciate in price, these companies see a disproportionate multiple. When the market, as we're currently seeing, thinks that Bitcoin price is going to trend down, they tend to trend down, and they go in both directions with amplitude and with a multiple. And that's what we're seeing right now. But very, very plainly, I don't think people understand what these companies are.
And since Strategy is the one that started this whole thing, the view that I have is that they are exchanging one form of capital for another. They're acquiring Bitcoin. They think that Bitcoin is going to become the financial nexus of the world. And they're positioning themselves to have as much of that pristine asset as possible when that world materializes. And if I have to nail it down to two points, I think those are the two things that people are misunderstanding.

**Stephan Livera** (3:12)
Yeah. Now, just for context, for listeners, we are recording this the 26th of June. The price of Bitcoin is just under $60,000. The price of MSTR right now is $85 and the price of Stretch is about $75.
So there's a lot of, as you were talking about before, there's a lot of people who are, let's say, critical or saying it's over for MSTR or it's over for Stretch, STRC.
What are they missing or how do you see Stretch bouncing back? Like, I guess, let's start on the Stretch side of things, because that's kind of interesting, because a lot of people see it now. I guess there's kind of that argument of whether you should call it par or what some people are calling a peg, right? They're saying the peg is broken and other people saying no, it's actually a par. How do you see that? Is it a problem for MSTR that Stretch has fallen this low, down to $75?

**Adrian Morris** (4:04)
So the whole par peg distinction, that's one mistake I made when it first came out last year. I was using par and peg interchangeably, right? But Stretch has a par, an intended par value of $100.
A peg is implying a fixed value that it must maintain. So those are two fundamentally different things. Stretch, to my knowledge and to my recollection, has never been marketed as something that has a peg. It has a $100 stated par value, and that's the same thing with all of the other preferred offerings. And I do believe that in the space, there's been a lot of interchangeable usage. That has not been ill-intentioned, but I think it's kind of muddied the view on what that $100 represents. So that aside, I view the preferred offerings, whether it be Stretch, Strike, Strife, Stride, SATA, but eventually the MediPlanet, Mercury, and Mars, I view all of these as Bitcoin derivatives. And I think that is one of the, I wouldn't say mistakes, but I would say misunderstandings that has been prevalent, is that you cannot have, in the case of MSCR, MSCR existing on top of Bitcoin, right? And it being very, very much a Bitcoin derivative, or as we were calling them last year, leverage Bitcoin equity, whatever common term you want to use.