Summary Strive Asset Management has seen its common stock price dip 92.4% from its 52-week-high, with its mNAV dropping to 1.24x. The company currently sits on a paper loss of $158 million, with the company also set to acquire Semler Scientific to expand its portfolio of Bitcoin. Holders of the Variable Rate Series A Perpetual Preferreds are set to see their distributions reduced from next year. These currently have a 13% current yield. Strive Asset Management, LLC ( ASST ) offers a jumbled and, in my opinion, currently hard to invest in Bitcoin (BTC-USD) as a treasury business strategy that aimed to ride the bandwagon established by Strategy ( MSTR ) but faces headwinds from elevated financing costs and a constrained premium to its BTC holdings. The company owned 7,525 BTC as of its most recent purchase of the cryptocurrency, with this bought at an average price of $113,383 per BTC for an aggregate nominal amount of $853.21 million. With BTC currently valued at $92,438, around $695 million in aggregate, ASST sits on a significant paper loss of around $158 million. While bulls would be right to highlight a market cap of $859 million puts ASST's mNAV at a decent 1.24x, this is far below MSTR's premium that was well north of 2x before the recent BTC dip. BTC as a treasury is anchored on constant access to the capital market to raise funds recycled into buying BTC. ASST needs to be able to continually sell its common equity to achieve this, but would see its BTC per share come in at a materially lower clip in the event its mNAV continues to narrow. Strive ASST's philosophy in a crowded marketplace of global BTC treasury companies is to focus on BTC per share and use the cryptocurrency as its hurdle rate for deploying capital. The hurdle rate is a term mainly used in private equity that describes the minimum rate of return required on an investment. ASST, which is the 14th largest publicly listed BTC as a treasury company, is likely describing a policy to BTC purchasing policy that limits new buys on pre-determined BTC per share metrics. The company is young, only going public in September through a merger with Asset Entities. ASST has since gone on to engineer an all-stock acquisition of Semler Scientific ( SMLR ). The deal would see ASST pay SMLR $90.52 per share, which represented a 210% premium at the time the acquisition was announced. Strive Website The Variable Rate Preferreds, Semler Scientific, Liquidity, And Cash Burn SMLR is currently trading for $20.33 per share at a $310 million market capitalization. It also currently owns 5,048 BTC, valued at $467 million. The clear mismatch between SMLR's current market cap, the implied acquisition market cap at $1.38 billion, and the value of SMLR's BTC holdings reflects the upside-down nature of the deal. The overall BTC as a treasury strategy depends on the constant tapping of investor euphoria to issue shares at a strong premium to buy BTC. The mismatch reflects the sustained pullback of BTC since the deal was announced, and a likelihood that the deal will be significantly altered. It simply does not make sense for ASST to pay $1.38 billion for BTC that's valued at less than half of this amount. It's entirely against ASST's own philosophy to focus on BTC per share, as they could just sell half the amount of shares they would need to exchange for the acquisition and own more BTC at current prices. For investors looking for BTC exposure, it won't make sense to pay such a premium when direct ownership or the use of an ETF would net more BTC. QuantumOnline ASST currently has a Variable Rate Series A Perpetual Preferred Stock ( SATA ) outstanding. These started trading shortly after the firm's IPO and is set to be used along with a $450 million at-the-market ("ATM") common stock offering shelf, and cash and cash equivalents on its balance sheet of $109 million as of the end of the fiscal 2025 third quarter to buy BTC. There were 2 million shares of SATA offered, upsized by 750,000 shares from the prior announcement, with the shares sold for $80 per share for gross proceeds of $160 million. The preferreds currently pay a $12 annual coupon , in monthly distributions, for a 13% current yield as they're currently swapping hands for $91.61 per share. QuantumOnline Further, as they're perpetual, ASST is under no obligation to redeem these at any point. They have a $100 per share liquidation value, so they're currently trading hands at an 8.4% discount to this. This works for investors looking for a forever income security, but in aggregate with the unique variable terms of the preferreds, raises significant risk that ASST will face headwinds in making what's currently a $24 million per year coupon payment. ASST needs constant access to the capital markets to be able to copy the MSTR strategy, so the use of monthly distributions and selling the preferreds at a discount was meant as sweeteners to get investors on board with the offering. Seeking Alpha ASST can start reducing the variable payments from three months after its IPO. This is limited to the aggregate of 25 basis points and the excess of one-month term SOFR on the first business day of the relevant distribution, over the minimum of the one-month term SOFR from the previous distribution period. As ASST pays out monthly, this implies that it can, from the first quarter of next year, reduce the distribution on the preferreds by at least 25 basis points per month, around 300 basis points per year. This would compress its coupon rate from 12% to 9% over 12 months at a minimum, lower than the 10% MSTR pays to the holders of some of its preferreds. SATA is up from its IPO as they were sold at such a steep discount, but the December Fed rate cut, in aggregate with a weak BTC price and the eventual 3-month hurdle, is likely set to see these trade lower. Cash flow from operations was $22.1 million during the third quarter, with ASST's cash balance set to cover this rate of operational cash burn by just under 5 quarters. However, the company maintains access to capital markets with an ongoing ATM program and can tap its BTC holdings for sales to meet its operational cash burn needs and extend its cash runway. Conclusion ASST's BTC holdings are upside-down, trading at a significant loss to its average buy price, just as its stock continues to dip. This is now down 92.4% from their 52-week-high. There are now far too many BTC as treasury companies available to investors to buy, with the list north of 100, not including the ETFs. SATA is a sell.
