Recent reports indicate that Strategy, led by Michael Saylor, did not engage in any Bitcoin transactions during the week of October 19th to 25th. Currently, the company maintains a significant holding of 848,517 BTC, which were acquired for a total of $64.02 billion, representing an average purchase price of $75,446 per Bitcoin.
In the same period, Strategy utilized cash reserves to repurchase $204.9 million worth of preferred stock, while maintaining a solid cash balance of $4.83 billion, as per a recent company disclosure.
Over the years, Strategy has established the largest corporate Bitcoin portfolio globally, primarily through stock sales and convertible debt offerings. However, there has been a noticeable shift in strategy this year, as the company has intermittently paused Bitcoin purchases and redirected capital towards buying back preferred stock instead.
The company has employed a staggered approach to its Bitcoin activities, experiencing multiple pauses in purchasing, including a recent five-week hiatus, followed by a shift back to selling Bitcoin instead of acquiring more.
Notably, in September, Strategy repurchased $176 million of its STRC preferred stock in one week, enlarging its digital credit securities buyback program from $1 billion to $2 billion.
Details on Preferred Dividends
The STRC preferred stock features a variable dividend structure and is intended to hover around a par value of $100. When the stock price dips below this threshold, as has been the case recently, the company’s preferences are mitigated by repurchasing the stock. A repayment at $86.52 on the par value of $100 would significantly reduce expenses while increasing the net Bitcoin earned per share.
On Monday, October 26, Bitcoin prices approached $80,000, showing volatility as they dipped into the low $79,000s over the preceding weekend, marking the lowest values in over a month.
The company’s average Bitcoin acquisition cost stands at $75,446, indicating a paper profit of approximately $3.9 billion on its current holdings. The reserves of $4.83 billion are earmarked for covering preferred dividends and interest on debt, as indicated in their financial filings.
Strategy’s ability to fund buybacks depends on capital generated from the sale of both preferred and common stock, which are currently trading below par. The company’s financial strategy has notably shifted towards utilizing funds from stock sales in the current year.
As of now, there has been no public announcement regarding the resumption of Bitcoin purchases by Strategy.
