Strategy allocates more funds to STRC buybacks than Bitcoin purchases
Last week, Michael Saylor’s company Strategy spent over six times its Bitcoin buying budget on repurchasing its STRC preferred shares. Between Monday and Sunday, Strategy bought 334 BTC for $28.7 million and concurrently repurchased approximately 1.77 million STRC preferred shares for $176.3 million. The company also announced plans to overhaul dividend payments across its preferred stock to enhance liquidity and make these securities more attractive for funding its Bitcoin treasury strategy.
Bitcoin Purchases and STRC Buybacks
Between Monday and Sunday, Strategy purchased 334 Bitcoin for $28.7 million, bringing its total Bitcoin holdings to 848,000 BTC, according to an 8-K filing submitted to the SEC on Monday.
Meanwhile, the company repurchased approximately 1.77 million of its STRC preferred shares for $176.3 million, indicating the buybacks of preferred stock far outpaced Bitcoin acquisitions during the week.
Changes to Dividend Payment Schedules
Strategy filed a separate proxy proposal requesting shareholder approval to switch dividend payments on its preferred stocks — STRC, STRF, STRK, and STRD — to a daily schedule.
This change would replace the current twice-monthly payments for STRC and quarterly dividends for the other three preferred stocks.
Strategy noted that dividend rates and total payout obligations would remain unchanged, but daily payments could reduce reinvestment delays and improve liquidity and price stability of these securities.
Shareholders are set to vote on this proposal at a special meeting on October 28. If approved, daily dividends for STRC would begin in November, with the other three preferred stocks following in January.
Bitcoin Holdings Growth in Q3
In the third quarter, Strategy’s Bitcoin holdings increased by just 0.2%, as sales nearly offset new purchases.
During the quarter, Strategy acquired 7,218 BTC and sold 5,553 BTC, ending September with 847,666 BTC compared to 846,000 BTC at June’s end.
This represents a significant slowdown in net Bitcoin accumulation compared to Q2, when holdings rose nearly 11% from 762,099 BTC to 846,000 BTC.
The net increase of 1,666 BTC in Q3 was valued at approximately $143 million at the time of publication, whereas Strategy spent approximately $1.38 billion on STRC buybacks during the same quarter.
Financial Performance and Market Reaction
Strategy reported a preliminary gain of $20.91 billion on its digital assets for Q3, largely reflecting an increase in the fair value of existing Bitcoin holdings.
Strategy’s MSTR shares rose 2.9% in premarket trading on Monday to $164.60, while STRC traded close to their $100 stated value at $99.45.
Bitcoin was trading around $86,063 at the time of publication, according to CoinGecko.
Why it matters
The news highlights Strategy’s increasing reliance on preferred stock as a tool to manage capital and fund its Bitcoin treasury strategy, prioritizing STRC buybacks significantly over direct Bitcoin purchases. The move to daily dividend payments aims to enhance liquidity and attractiveness of these preferred shares, potentially improving the company’s financial flexibility. Meanwhile, the slowdown in Bitcoin accumulation reflects a more balanced portfolio management approach amid substantial capital deployment for stock repurchases.
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