Strategy spends $192.4 million on STRC buybacks, nearly nine times Bitcoin outlay

Strategy disclosed on October 12 that Strategy bought 250 Bitcoin for about $21.5 million between October 5 and October 11. Strategy repurchased 1,932,145 shares of variable-rate STRC preferred stock for $192.4 million, nearly nine times the Bitcoin spending. The spending gap highlights competing demands on Strategy's capital from Bitcoin accumulation and support for preferred securities. Strategy was formerly named MicroStrategy and was founded by Michael Saylor.

The latest Bitcoin acquisition lifted Strategy's holdings to 848,250 BTC, purchased for approximately $64 billion at an average price of $75,444 per coin. Strategy paid an average of roughly $86,194 per coin for the latest purchase. Strategy bought 334 BTC at an average price of $85,839 during the previous reporting period. The slowing purchases come as Bitcoin struggles to sustain a recovery after last week's market downturn briefly pushed Bitcoin toward $80,000.

However, Strategy's STRC repurchase spending rose from $176.3 million during September 28 to October 4 to $192.4 million during October 5 to October 11. Strategy reported $354.8 million of remaining authorization under the digital credit securities repurchase program. Strategy paid an implied average of approximately $99.58 per share in the latest buyback, a discount of less than 0.5% to STRC's $100 stated value. The repurchases have become more expensive as STRC approaches $100. Strategy's July repurchase policy envisaged buying more aggressively at deeper discounts and reducing purchases as STRC approached $100.

The buybacks reduce future dividend obligations by retiring outstanding preferred shares. The latest repurchases would eliminate approximately $23.2 million in annualized dividend payments at STRC's current 12% annual dividend rate, assuming the rate remains unchanged. However, Strategy's broader objective is to establish sufficient independent demand for STRC to trade consistently near $100 without continued large-scale intervention.

The accelerated repurchases are drawing down capital available for Strategy's broader treasury operations. Strategy held $4.88 billion in the dedicated USD Reserve as of October 11. Strategy also held $640.5 million in USD Cash, bringing total dollar-denominated liquidity to approximately $5.52 billion. Strategy's USD Cash balance fell $192.9 million from $833.4 million a week earlier, nearly matching the STRC repurchase spending. Strategy raised approximately $21 million by selling 125,183 common shares during the week. Strategy issued no additional preferred stock under the at-the-market programs. Strategy funded $21 million of the Bitcoin purchase with common-stock proceeds and another $0.5 million with USD Cash.

Strategy's board-approved USD Reserve policy earmarks the reserve for preferred dividends and interest payments. Other uses of the USD Reserve require board authorization. Strategy says Strategy is not authorized to use the reserve for STRC repurchases. USD Cash can finance Bitcoin purchases, preferred-share repurchases and other capital management activities. Sustained STRC spending therefore reduces unrestricted liquidity available for other uses unless Strategy raises additional funds. The remaining $354.8 million repurchase authorization would cover about 1.84 weeks at the latest $192.4 million weekly pace if the pace and authorization remained unchanged.

Shareholders will vote on the daily-dividend proposal on October 28. Strategy seeks approval to move four US-listed preferred securities to daily dividend payments, with STRC transitioning first. Dividends would accrue daily and be paid the next business day under the proposal. The proposal would replace STRC's current semi-monthly schedule without increasing the annual dividend rate. Strategy argues that the change could improve liquidity, reduce reinvestment delays and encourage more stable trading around STRC's $100 target. STRC's first daily record date would be November 1, with payment scheduled for November 2, if shareholders approve the proposal. Strategy is scheduled to report third-quarter financial results on October 29, a day after the vote. The results give management another opportunity to address the preferred-stock strategy and slowing Bitcoin accumulation.