Hook

A 13% discount on a preferred stock backed by 843,775 BTC and $3 billion in cash. That’s the gap between MicroStrategy’s STRC trading at $85.29 and former Goldman credit specialist Khing Oei’s calculated fair value of $96.3.

The market is pricing in a dividend cut that would take 17 years to exhaust the company’s cash reserves. Oei’s model says the runway is 29 years — even if Bitcoin never goes up again.

Something doesn’t add up.

Let me be clear: I’m not a buyer of this thesis. I’m a quant trader who backtests every yield proposition against my own P&L history. But Oei’s analysis deserves a deep dive because it exposes a rare species in crypto: a structured product where the market’s fear might be the alpha.

Context

MicroStrategy (now renamed “Strategy” after its Bitcoin pivot) is not a tech company anymore. It is a Bitcoin treasury wrapped in a corporate shell. Since 2020, CEO Michael Saylor has used equity and debt to accumulate the largest corporate stash of Bitcoin — currently 843,775 BTC worth roughly $60 billion at spot.

In July 2025, the company issued a new class of preferred stock called STRC. Par value: $100. Dividend: 12% annually. No maturity date. No mandatory redemption. The company only pays if it “has the ability” — meaning it can skip dividends without triggering bankruptcy, unlike bond coupons.

The market received it with skepticism. STRC debuted at $90 and quickly dropped to $85, implying a dividend yield of 14% (12 / 85). Yield chasers rushed in, but smart money stayed away. Why? Because a 14% yield on a perpetual instrument tied to a single volatile asset — Bitcoin — smells like a trap.

Enter Khing Oei, a veteran credit analyst from Goldman Sachs who now runs his own distressed-debt fund. On March 3, 2026, Oei published a 50-page thesis arguing that STRC is deeply undervalued. His conclusion: fair value between $96 and $100, a 13–18% upside from current levels.

“History is just data waiting to be backtested,” Oei wrote. “The market is using a flawed frame: it’s pricing STRC as if the dividend is a perpetual coupon with no asset backing. But this is not a bond. It’s a preferred stock backed by the most liquid hard asset on earth.”

Let’s unpack his model with cold numbers.

Core: The Order Flow Analysis

Oei built a discounted cash flow (DCF) model. The inputs: - Dividend: $12 per share per year (12% of $100 par). - Discount rate: 12%, reflecting the company’s weighted average cost of capital (WACC) plus a risk premium for Bitcoin volatility. - Terminal value: None. STRC is perpetual, so the model assumes dividends continue forever — but Oei only goes 29 years out. Why 29? Because he calculated how long MicroStrategy’s current cash and Bitcoin reserves can fund the dividends without any new income.

The 29-Year Buffer

MicroStrategy’s balance sheet as of Q4 2025: $3 billion cash, plus Bitcoin worth $60 billion. Total liabilities (including debt) are about $6 billion. Preferred equity (STRC and others) totals $10.5 billion. Common equity is the residual.

Oei’s key observation: the company’s cash + Bitcoin (net of all debt and other obligations) equals $57 billion. The annual dividend on all preferred stock is roughly $1.2 billion (10.5 billion × 12%). Even if Bitcoin never pays a dividend and never appreciates, the company can sell Bitcoin to cover dividends for 47 years ($57 billion / $1.2 billion).

But wait — MicroStrategy also has operating cash flow from its software business? No. The software segment is shrinking and generates negligible profit. The only real asset is Bitcoin. So Oei trimmed the buffer to 29 years to account for transaction costs, market impact of selling large BTC blocks, and potential regulatory friction.

“29 years is the worst-case scenario,” Oei wrote. “If Bitcoin grows at just 3.4% per year — less than its historical average — the company never needs to sell a single coin. The dividend is self-sustaining.”

The Market’s Mistake

The market price of $85.29 implies investors expect only 17 years of dividends before a default or redemption. Why 17? Take the present value of $12 per year for 17 years discounted at 12%: about $85. That’s exactly what the stock is trading at.

In other words, the market believes MicroStrategy’s Bitcoin reserves are sufficient for only 17 years of dividends. Oei’s model says 29 years. The gap is 12 years of dividends — or about $13.01 per share in present value ($12 × 12 years discounted at 12%). That’s the mispricing.

Sensitivity to Bitcoin Price

Oei also ran a sensitivity table linking STRC’s fair value to Bitcoin’s price:

• BTC at $120,000 → STRC fair value $102 (premium to par).
• BTC at $80,000 → STRC fair value $100 (par).
• BTC at $60,000 (current) → STRC fair value $96.3.
• BTC at $40,000 → STRC fair value $58.
• BTC at $20,000 → STRC fair value $20 (near zero).

Oei’s thesis works only if Bitcoin stays above $60,000. If Bitcoin drops to $40,000, STRC would fall 40% from here — not 13% upside.

Contrarian: Why the Market Might Be Right

I’ve seen this movie before. In 2020, I deployed Python scripts to arbitrage slippage between Uniswap and Curve. The yields looked too good to be true — and they were. Impermanent loss ate 40% of my returns in six months.

I also lost 30% of my portfolio in the Terra-Luna collapse in 2022 because I trusted an algorithmic stablecoin’s “29-year buffer” — the Luna Foundation Guard supposedly had enough Bitcoin to backstop UST. We all know how that ended.

Here’s what Oei’s model glosses over:

1. Liquidity risk: STRC trades on Nasdaq with thin volume. Average daily trading is about $5 million. A single whale selling could push the price to $75 in a day. The 13% discount could quickly become 25%.

1. Management discretion: MicroStrategy can suspend dividends at any time if Saylor decides to use cash for a bigger Bitcoin buy. Or the board could issue more preferred shares, diluting existing holders. Pre-IPO investors have no vote. “Governance is a black box,” as one skeptic put it.

1. Regulatory overhang: The SEC has already scrutinized MicroStrategy’s accounting for Bitcoin holdings. If the SEC deems STRC’s dividend a “security” in itself (it already is), further disclosure requirements could expose hidden liabilities. Worse, if Bitcoin itself is ever labeled a security, STRC’s entire asset base faces existential risk.

1. The “29 years” assumption: It assumes MicroStrategy can sell Bitcoin without crashing the market. But if the company is forced to sell even 10% of its stash to pay dividends during a bear market, the selling pressure could depress Bitcoin price by 15–20%, creating a death spiral. This is precisely what happened with Luna’s Bitcoin backing.

Oei dismisses these as “noise.” But in credit markets, noise becomes signal when the tide turns.

Takeaway

STRC is a bet on two things: Bitcoin staying above $60,000, and Michael Saylor’s capital allocation discipline remaining intact. Both are highly correlated. If you believe Bitcoin’s long-term trajectory is upward, STRC’s 12% yield is a nice bonus on top of potential capital appreciation. If you’re bearish, STRC is a leveraged poison.

My personal rule: I never buy preferred stocks of companies whose sole asset is a speculative asset I wouldn’t hold directly. I learned this in 2017 when I audited ICO smart contracts — the ones with “collateral” were the least safe.

“Math doesn't lie, but narratives do,” I often repeat to my team. Oei’s math is correct under his assumptions. But assumptions are not reality. The market is pricing in a 17-year dividend runway because it remembers Terra, it remembers Lehman, and it remembers that no corporate structure is safe when the underlying asset drops 90%.

If you’re a true Bitcoin maxi, STRC at $85 is a steal. If you’re a risk manager, it’s a risk you don’t need to take. The choice is yours — but choose with data, not hope.

Disclosure: I hold no position in STRC or MSTR. This analysis is not financial advice. I have backtested similar yield strategies and lost money. Past performance does not guarantee future results.