Former Goldman Sachs Executive Says Strategy’s STRC Preferred Stock Is Undervalued by 13%

A former Goldman Sachs credit investment specialist has publicly stated that Strategy’s preferred stock, ticker STRC, is trading at a significant discount to its intrinsic value. Khing Oei, who previously focused on credit investments at the investment bank, argues that the market is mispricing the security by roughly 13%.

Valuation Analysis and Fair Value Estimate

According to a report from BeInCrypto, Oei estimates STRC’s fair value to be approximately $96 per share. This stands in contrast to its current market price, which hovers around the $85 mark. The analyst’s methodology is notable because he evaluates STRC through the lens of a bond, analyzing its future cash flows, rather than treating it as a perpetual dividend product.

Sustainability of Dividends

A central pillar of Oei’s analysis is the long-term sustainability of STRC’s dividend. He posits that even in a scenario where Bitcoin’s price remains stagnant for an extended period, the dividend could continue to be paid out for roughly 29 years. This assessment provides a significant buffer for investors concerned about the security’s yield in a volatile market.

Why This Matters for Investors

This perspective is particularly relevant for income-focused investors who may be wary of preferred stocks tied to Bitcoin-centric companies. Oei’s background at Goldman Sachs lends a degree of authority to the analysis, offering a more traditional financial framework for evaluating a digital asset-linked security. The key takeaway is that the market may be over-penalizing STRC for its association with Bitcoin, potentially creating a buying opportunity for those who accept Oei’s bond-like valuation model.

Conclusion

The argument from the former Goldman Sachs executive suggests that Strategy’s STRC preferred stock may offer a compelling risk/reward profile. While the stock is currently trading at a discount, the analysis hinges on a specific valuation method that treats the security more like a fixed-income instrument. Investors should weigh this professional opinion against their own due diligence, particularly regarding Bitcoin price assumptions and the financial health of the issuer.

FAQs

Q1: What is STRC?
STRC is the ticker symbol for a specific series of preferred stock issued by Strategy (formerly MicroStrategy). It pays a fixed dividend and is senior to common stock in the company’s capital structure.

Q2: Why does Khing Oei believe STRC is undervalued?
Oei believes the market is incorrectly pricing STRC by treating it as a perpetual risk. He analyzes it as a bond with a defined cash flow stream, concluding its fair value is around $96, versus its current ~$85 price.

Q3: Is the STRC dividend safe?
According to Oei’s analysis, the dividend could be sustainable for up to 29 years even without Bitcoin price appreciation. However, this is a forward-looking estimate and not a guarantee. Investors should review the company’s financial statements for a complete picture.