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Dear Reader,
Last year I ran for Mayor of New York City.
And lost to a 34-year-old Democratic Socialist.
Now I'm convinced what's starting in New York will spread across America.
Just for starters:
- The new mayor wants to spend $70 million of taxpayer money just to study whether government-run grocery stores are a good idea.
- He's threatening a 9.5% property tax hike on every homeowner in the city.
- And he wants to raise taxes on every corporation and high earner.
This isn't just a New York story. Nearly 40% of Americans now have a "positive" view of socialism.
But what nobody's talking about is WHY this is happening... and where it's all headed.
I have my MBA from Harvard and spend my time in correspondence with billionaires like Warren Buffett and Bill Ackman. I've spent 30 years on Wall Street. And there's a specific term for what's unfolding in America right now... one that points to an economic event unlike anything we've seen in over 100 years.
I'm not running for office again. But if you care about your wealth, your family, and your future, you need to understand what's really coming.
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I strongly encourage you to check it out here.
Regards,
Whitney Tilson
Editor, Stansberry Investment Advisory
Former Hedge Fund Manager
Co-Founder, Teach for America
Harvard MBA
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Strategy Pauses Bitcoin Buys to Focus on Preferred Stock Buybacks
Author: Jeffrey Neal Johnson. Date Posted: 11/2/2026.
Key Points
- Strategy reported a third-quarter net income of about $19.5 billion, mostly an unrealized fair-value gain on its Bitcoin holdings under ASU 2023-08.
- The company has paused new Bitcoin purchases and common stock issuance, instead using cash to repurchase high-yielding preferred shares like STRC and reduce debt.
- Strategy maintains a $4.8 billion USD Reserve for dividend obligations, while stress tests show preferred stock and debt coverage would fall to 1x if Bitcoin dropped to about $17,600.
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Strategy (NASDAQ: MSTR) recently reported third-quarter net income approaching $19.5 billion, largely due to a fair-value adjustment to its digital asset treasury.
While a $21 billion paper gain grabs attention, underlying capital flows suggest a more calculated pivot. Strategy has temporarily paused new Bitcoin acquisitions and halted common stock issuance. Instead, management is using hundreds of millions of dollars in cash to repurchase high-yielding preferred shares.
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Watch the free walkthrough and explore your 30 days of Income Blueprint access.This move represents a shift in the company's tactics. Rather than leveraging its balance sheet to accumulate digital assets at any cost, Strategy is prioritizing deleveraging and stabilizing its capital structure. By retiring expensive liabilities at a discount, the company appears to be restructuring its financial foundation to better withstand future market volatility while preserving long-term equity upside.
Fair-Value Gains vs. Cash Flow
To understand Strategy's recent capital allocation decisions, investors need to separate operating cash flow from accounting adjustments. The reported third-quarter net income of about $19.5 billion, or approximately $44.75 per share, largely reflects the adoption of the ASU 2023-08 accounting standard.
This accounting standard requires companies to measure digital assets at fair value, meaning the roughly $20.9 billion gain is entirely unrealized. It reflects the paper appreciation in the price of Bitcoin (BTC), not cash deposited into the corporate treasury.
Beneath the digital asset marks, Strategy's legacy enterprise software business continues to operate with steady, albeit contracting, metrics. Core software revenue declined about 2.5% year over year to approximately $125 million. Despite the slight revenue decline, operational efficiency remains intact, with gross profit margins holding strong at roughly 71%.
The software division generates reliable margins, but its cash flow is relatively small compared with Strategy's financial obligations. That leaves the company relying on other funding sources and has prompted it to rethink how it deploys available liquidity. Given its reliance on digital assets, Strategy must actively manage its balance sheet rather than treat it as a static vault.
Strategic Sacrifices: Pausing Bitcoin to Retire Debt
The most telling data points from the recent quarter appear in the weekly filing disclosures. During the week ending Oct. 25, 2026, Strategy did not sell common stock or add to its roughly 848,500-Bitcoin reserve. Instead, management deployed approximately $205 million in cash to repurchase its Variable Rate Series A (NASDAQ: STRC) preferred stock. This action is part of a broader $3 billion authorization to repurchase digital credit securities, under which Strategy has already spent about $2.04 billion year to date.
The rationale for this pivot traces back to the premium at which Strategy common stock trades relative to its net asset value. In previous market cycles throughout 2023 and 2024, the common stock traded at premiums of around 2.5x to 2.6x net asset value. At those levels, issuing common stock to acquire Bitcoin is highly accretive to existing shareholders. Recently, that premium has compressed to roughly 1.15x.
When the equity premium narrows, the advantage of issuing shares to buy Bitcoin diminishes. At the same time, Strategy carries expensive debt on its balance sheet. Repurchasing STRC preferred shares at an average price of about $97.39 offers a steady return by eliminating a substantial, perpetual cash liability.
Management recognizes that strengthening the balance sheet is currently a more efficient use of capital than paying high prices for digital assets. This disciplined approach helps ensure the company can support future expansion.
Funding the Fortress: The Mechanics of Digital Credit
The STRC preferred stock acts as a form of digital credit, carrying an effective yield of roughly 12%. Shareholders also recently approved a transition to daily dividend accruals and payments for multiple preferred instruments, beginning with STRC in November 2026 and followed by Series A Perpetual Strife (NASDAQ: STRF), Series A Perpetual Strike (NASDAQ: STRK) and Series A Perpetual Stride (NASDAQ: STRD) in early 2027.
Servicing a 12% perpetual cash liability requires substantial liquidity. Because the core software business cannot cover these yields organically, Strategy maintains a dedicated USD Reserve, which currently stands at about $4.8 billion. This reserve is designed to provide approximately 3.4 years of runway for dividend and interest obligations.
To fund this reserve and execute buybacks, Strategy occasionally monetizes part of its digital treasury. Year to date, management has sold approximately $432 million in Bitcoin. This dynamic highlights the maturation of the corporate model.
The digital asset is no longer just a passively held reserve; it is an active treasury tool used to fund fiat liabilities. Management frames this structure as a strategic hedge against the expansion of the U.S. M2 money supply, which has grown at roughly a 1.9% four-year annualized rate. By holding scarce digital assets against depreciating fiat liabilities, Strategy is positioning itself to benefit from long-term economic trends while proactively managing near-term capital costs.
The Break-Even Board: Stress-Testing the Bitcoin Strategy
The success of this digital credit model depends on specific appreciation metrics. Strategy models a break-even annual recurring return of about 2.2% for Bitcoin. At this rate, the firm generates just enough value to cover its dividend and interest obligations.
To generate positive value for common equity holders, Bitcoin needs to achieve a hurdle annual recurring return of around 10.6%. Historically, it has comfortably exceeded these thresholds over multi-year periods, but the structure inherently requires sustained price appreciation to remain optimal.
Downside parameters are also clearly defined and carefully monitored. Stress testing suggests that if Bitcoin prices fell to around $17,600, asset coverage of Strategy's preferred stock and debt would drop to 1x. While the $4.8 billion USD Reserve provides a multi-year buffer against immediate liquidity crises, a prolonged bear market would steadily drain those cash reserves.
To add another layer of defense, the board recently authorized an approximately $1 billion common stock repurchase program. Although unused to date, this authorization gives Strategy the flexibility to step in and defend the stock if its net asset value premium falls below intrinsic value.
By prioritizing high-yield debt reduction and maintaining robust cash reserves, Strategy is building a financial fortress designed to endure market corrections while remaining prepared for future digital asset adoption.
Sandisk Shares Are Oversold: Bargain or Value Trap?
Author: Sam Quirke. Date Posted: 11/7/2026.
Key Points
- SanDisk shares fell more than 22% on Nov. 5, leaving the stock roughly 65% below its June peak despite strong fiscal Q1 earnings.
- The sell-off reflects investor doubt that SanDisk's extraordinary gross margins above 85%, driven by hot NAND pricing, can be sustained long-term.
- Whether SanDisk is a bargain or value trap depends on if current enterprise demand reflects a durable trend or a cyclical peak.
- Special Report: $0. Later: $29.97. (From Profits Run)
When a stock sheds almost two-thirds of its value in a matter of months, the instinct is to go hunting for a bargain. Sandisk Corp. (NASDAQ: SNDK), the flash-memory and data-storage specialist, is dangling exactly that temptation in front of investors.
The stock finished down more than 22% on Nov. 5 alone, a single-session rout that dragged the shares to roughly 65% below their June peak. Its relative strength index has now fallen to its lowest reading since April 2025, a deeply oversold level that usually has contrarians circling.
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Claim today's free stock pick before December 8thFor a company once crowned among the biggest winners of the AI boom, that’s a staggering fall from grace. The pain hasn’t been Sandisk’s alone, either: the sell-off has spread across the entire AI trade, with the tech-heavy NASDAQ index suffering its worst day in 19 months on Nov. 5, falling around 5.5%.
So what happened to the market’s favorite memory stock, and is this the moment brave investors have been waiting for? The answer starts with what didn’t cause the crash.
The Sell-Off Isn't About Earnings
Despite the latest drop coming just a week after the company’s Q1 fiscal year 2027 earnings, the results can’t be blamed here. Sandisk’s late-October results were, by almost any measure, spectacular. Revenue came in above $11 billion, up 377.5% from a year earlier, with gross margins north of 85% and billions of dollars flowing back to shareholders through buybacks.
Management then guided the current quarter higher rather than lower, hardly the posture of a company bracing for a collapse. On the headline numbers, this was a business performing about as well as it ever has. In other words, the market looked straight past a blockbuster quarter and fixated on a very different question: How long can numbers this good possibly last?
Why the Market Stopped Believing the Margins
That question cuts to the heart of the bear case. Gross margins around 85% are extraordinary for a memory company, and they exist largely because NAND pricing has been running so hot. The worry is simple: Margins like these tend to mark a peak, not a plateau.
The stock’s valuation only sharpens the anxiety. After the latest leg down in the crash, Sandisk trades at a price-to-earnings ratio of about 6.5x based on trailing earnings. That sounds absurdly cheap—until you realize it’s only true if today’s bumper profits last. If those earnings are near a cyclical top, that low multiple is a mirage rather than a margin of safety.
To be sure, the bulls have a real rebuttal. Sandisk’s data-center business is booming, with revenue up more than 60% sequentially, and a chunk of its future output is already locked in under long-term supply agreements covering roughly half of fiscal 2027 NAND bit output. That’s real visibility, rather than wishful thinking, but the market is obviously asking for more reassurance.
The NAND Cycle Is the Real Swing Factor
Underneath the stock’s potential sits the current memory cycle, and here the picture splits in two. Enterprise and data-center demand, powered by AI, remains strong enough to keep pushing specialist pricing higher. Consumer demand, by contrast, is buckling as those higher prices get passed through, with Sandisk’s consumer revenue falling nearly 30% from the previous quarter.
That divergence leaves the company leaning heavily on hyperscaler spending, which is a wonderful place to be until it isn’t. Any moderation in AI capital budgets, or a wave of fresh supply as rival NAND producers ramp up capacity, could unwind the very pricing that makes those eye-wateringly high margins possible.
This is why the sell-off is as much macro as micro. Sandisk slid alongside the broader AI trade as investors suddenly questioned whether the current boom is durable or merely cyclical, and a stock priced for flawless execution had the most to give back.
So Is Sandisk a Bargain or a Value Trap?
The honest answer is that it hinges almost entirely on what you think about one variable: whether Sandisk’s current earning power is a new structural reality or the high-water mark of a cycle. If enterprise demand holds and prices only drift lower gradually, the stock looks seriously mispriced at these levels.
If, on the other hand, margins normalize and consumer weakness spreads, then that tempting low multiple is exactly the trap it looks too good to be. Anyone betting on a bounce here is really making one call above all others: that this is the strongest phase of the cycle, not its final act. For now, the chart screams bargain while the cycle whispers caution, and only the next few quarters of NAND pricing data will settle which signal was right.
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