Jain Criticizes STRC Dividend as Bitcoin Rally Fails to Repeg Preferred Stock

Strategy's STRC preferred stock has failed to return to its $100 stated value despite Bitcoin's recent rally, prompting Multicoin Capital co-founder Tushar Jain to question whether the 12% dividend is sufficient compensation for investors. According to Jain, the security's drawdown risk outweighs the current yield.

STRC currently trades at $95.31, which is below its stated value and 4.69% less than its target price. The stock has recovered from its June low of $71.25 but still lags behind Bitcoin's price, which reached an intraday high of $78,763 on August 22.

Strategy has used sales of MSTR shares to fund STRC dividends and share repurchases. Instead of raising the dividend again, Strategy has repurchased STRC shares, with over 1 million shares bought back in a single transaction. The company has also raised $333.7 million by selling MSTR shares.

Jain argued that increasing the dividend would create another problem for Strategy as it would raise its recurring cash needs substantially.