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BTC Strategy suspends Bitcoin purchases for a third week and repurchases $139 million in STRC preferred stock.
According to its latest SEC 8-K filing, Strategy, led by Michael Saylor, has not increased its Bitcoin holdings for three consecutive weeks. Instead, the company spent $139 million to buy back its own STRC preferred shares, shifting its financial focus in the near term from further accumulation of cryptocurrency to share buybacks.
Bitcoin positions remain unchanged
Strategy's Bitcoin reserves are 845,050 BTC, a figure that has not changed since the company purchased 4,603 additional bitcoins for nearly US$370 million on August 31. Earlier this year, the company suspended Bitcoin acquisitions for 10 weeks before resuming purchases at the end of August.
Public data from Bitcoin Treasuries shows that Strategy spent approximately US$63.73 billion on building its Bitcoin inventory, with an average price of approximately US$75,412 per bitcoin. Based on current market value, the company's Bitcoin holdings are valued at approximately $66 billion.
During the most recent filing disclosure period, the company did not liquidate any bitcoins or use its "mark-to-market" equity plan, and its MSTR common stock remained static for two consecutive weeks.
Focus shifts to preferred stock repurchase
Between September 8 and 13, Strategy bought back 1,420,467 STRC preferred shares in an effort to bring the stock price closer to the $100 par value. On September 13, the STRC closed at $98.64, below the coupon threshold. Management believes that any buyback below $100 has an immediate value-adding effect because cancellation of shares at a discounted price avoids future dividend obligations.
STRC is a preferred stock instrument that enjoys priority in the liquidation order of the company's common stock and is characterized by short-term "digital credit" backed by Strategy's cash and Bitcoin. However, holders do not have direct recourse against the underlying bitcoin.
The company used its USD Cash pool to fund recent buybacks, one of its two U.S. dollar reserves. As of September 13, Strategy reported that USD Reserve, used to pay dividends on preferred shares and interest on debt, was $5.1 billion, while USD Cash was $1.3 billion.
Repurchase Program Expansion and Future Plans
Recently, Strategy's board of directors approved doubling the size of its digital credit securities repurchase program to US$2 billion. The previous week, the company repurchased $176.3 million worth of STRC shares, involving 1,810,885 shares. As of now, US$1.05 billion is still available for preferred share repurchase and US$1 billion is available for the purchase of MSTR common stock.
On the company's credit dashboard, Michael Siler reported that the STRC's "BTC Credit" spread was 57 basis points and the U.S. dollar duration was 3.9 years. These data are based on the assumption of an annualized Bitcoin return of 10%, a volatility of 40%, and a Bitcoin price of $77,266.
Strategy continues to repurchase its STRC preferred shares on a large scale, investing US$139 million last week, while maintaining its huge Bitcoin position at 845,050 BTC. As the world's largest holder of corporate bitcoin, Strategy remains firmly positioned, ahead of competitors such as Twenty One Capital, Metaplane and MARA Holdings. The latest closing price of the company's common stock MSTR was $130.97.
Founder and Executive Chairman Michael Siler continues to lead the company's strategy of maintaining a large Bitcoin treasury and optimizing shareholder returns through dynamic repurchase.
Glossary
STRC Preferred Stock: A type of stock issued by Strategy that has higher claims on the company's assets and earnings than common stock, but does not confer direct rights on the company's Bitcoin reserves. STRC is promoted as a "digital credit" tool with clear payment and redemption characteristics.
