Michael Saylor’s Strategy (NASDAQ: MSTR) spent roughly nine times the $21.5 million on buying 250 BTC during the period between October 5 and 11 on repurchasing its own STRC preferred shares, which it directed $192.4 million into.
Strategy confirmed the nine-to-one STRC-to-BTC purchase in its 8-K filing with the Securities and Exchange Commission (SEC) on October 12.
What did Strategy buy this week?
Notably, the 250 BTC purchase, at an average price of $86,194 per coin, is the latest leg in Strategy’s record stack, bringing it to 848,250 BTC. The Virginia-based firm has spent roughly $64 billion to build its portfolio, paying an average of $75,444 per token.
The bigger headline was the amount Strategy committed to buying back its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC). At an average buyback price of about $99.69 per share, the firm spent $192.4 million to repurchase 1,932,145 STRC shares.
Strategy raised $21 million of the $21.5 million it spent on Bitcoin from selling about 125,000 MSTR common shares via its at-the-market offering program. The remaining $500,000 came from the USD Cash.
Strategy did not sell any preferred stock during the week from October 5 to 11.
Strategy now has $354.8 million left for buybacks under the digital credit securities repurchase program that it expanded to $2 billion in September. That program is different from the MSTR common stock repurchase program, which still holds $1 billion in capacity.
Why Strategy keeps buying STRC
Strategy laid out the logic for buying back its own STRC whenever the preferred share trades below its $100 par value in a July 27 press release announcing the program, which began with a $25 million repurchase.
The company’s stated goal is for STRC to trade near $100 with high liquidity and low volatility.
Strategy’s president Phong Le explained: “At prices below $100 per share, STRC repurchases represent an attractive allocation of capital because they can reduce future preferred dividend requirements at a discount.”
In Strategy’s second-quarter results released July 30, the firm claimed a 13% discount on the $25 million it spent to acquire STRC, which was worth $28.9 million at face value.
The cash position behind the dividends
As of October 11, Saylor confirmed that Strategy reported a USD Reserve of $4.88 billion and a separate USD Cash balance of $640.5 million, together about $5.5 billion. The former is earmarked for preferred dividends and debt interest, while the latter funds Bitcoin purchases and other uses.
In a separate post, he put Strategy’s USD duration at 3.5 years and STRC’s Bitcoin credit at 52 basis points, based on assumptions of 10% annual Bitcoin returns, 40% volatility and a Bitcoin price of $82,252.
The buyback pace continues a pattern from earlier weeks. Strategy repurchased $151.7 million of STRC and bought 1,665 BTC in the period ending September 27, as Cryptopolitan reported.
Strategy’s common stockholders vote on October 28 on a proposal to switch STRC and its other preferred securities to daily dividends. If approved, STRC would see its first daily record date on November 1 and first payment on November 2, with the annualized rate unchanged, according to the company’s investor materials.
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