Jeff Dorman, the chief investment officer at Arca, has put forward a clear proposal to resolve the turmoil surrounding Strategy’s STRC preferred stock: sell a substantial amount of Bitcoin. The preferred shares, which have plummeted as much as 17% below their $100 par value, hit a record low of $82.53 before recovering to $88.59 on June 18. Dorman argues that only direct intervention can restore confidence in the capital structure.
In a recent social media post, Dorman characterized the situation as the latest twist in what he calls the “MSTR pickle.” He believes management must either take decisive action or watch the company’s various components remain under stress. His recommended move involves offloading between $3 billion and $4 billion worth of Bitcoin. While he gives this outcome only a 25% probability, he notes that such a sale would buy time, support STRC holders, and alleviate concerns about preferred stock obligations without fundamentally derailing Strategy’s long-term Bitcoin strategy. Though a large Bitcoin sell-off might temporarily pressure the asset’s price, Dorman contends it would provide crucial breathing room.
More likely, in Dorman’s view, is that Strategy will persist with its existing approach—selling modest amounts of MSTR stock at levels he describes as non-accretive. He assigns a 70% probability to this path, which would allow STRC investors to hold onto some hope of recovery while Bitcoin reserves remain mostly untouched. However, common shareholders could face further losses under this scenario.
The discourse around Strategy’s financing model has been intensifying. Prominent skeptic Peter Schiff has accused co-founder Michael Saylor of misleading investors who bought STRC based on its advertised yield. Schiff warns that retirees and income-focused investors might have legal grounds if risks were not properly disclosed. He also highlights that the stock’s decline could make future fundraising costlier, as investors may demand higher yields for new STRC shares.
Beyond selling stock or Bitcoin, Dorman outlines a “nuclear option” with a 5% chance—cutting payments tied to preferred securities. This drastic step, he explains, could leave preferred shareholders recovering just 30 to 40 cents on the dollar and effectively lock Strategy out of capital markets. On the flip side, it would eliminate an annual cash drain of approximately $1.7 billion.
Liquidity concerns have also surfaced. Market maker QCP estimates that Strategy’s available liquidity could sustain preferred dividend payments for roughly seven and a half months. If existing funding channels become less attractive, QCP suggests Bitcoin sales might become necessary. Dorman further challenges Strategy’s valuation, noting that the company holds about $35.2 billion in unencumbered Bitcoin collateral against an equity market cap of around $40.4 billion. This puts MSTR at roughly 1.15 times net asset value, which he argues is too high. He warns that unless Bitcoin strongly rebounds, the stock could decline further, with any upside dependent on avoiding additional dilution from dividends, asset sales, or new fundraising efforts.