Strategy’s Recent Financial Moves: Bitcoin Acquisition and Preferred Share Buybacks

Key Highlights:

• Bitcoin Purchase: Acquired 811 BTC for $65.5 million.
• Preferred Share Buyback: Spent $208.2 million on STRC shares.
• Total Bitcoin Holdings: Now at 849,327 BTC, with an average acquisition cost of $75,451 per BTC.
• Funding Sources: Proceeds from MSTR common stock sales contributed to Bitcoin purchases and cash reserves.

Strategy Expands Bitcoin Holdings While Prioritizing Preferred Share Buybacks

November 2, 2023

In a significant move within the cryptocurrency and equity markets, Strategy has acquired 811 Bitcoin (BTC) for approximately $65.5 million, while simultaneously repurchasing $208.2 million worth of its preferred shares, as disclosed in transactions on November 2. This latest acquisition underscores the company’s ongoing commitment to Bitcoin accumulation, albeit with a notable emphasis on retiring preferred equity.

Strategy’s Bitcoin Holdings Reach 849,327 BTC

The recent Bitcoin purchase, made between October 26 and November 1, was executed at an average price of $80,846 per coin. This acquisition has brought Strategy’s total Bitcoin holdings to an impressive 849,327 BTC, which have been accumulated at an average cost of $75,451 per Bitcoin, totaling around $64.1 billion. While the latest purchase price exceeds the average cost of its overall holdings, it reflects Strategy’s strategy of maintaining exposure to Bitcoin amidst a broader capital allocation plan.

MSTR Share Sales Funded Bitcoin and Added Cash

To finance this latest Bitcoin acquisition, Strategy sold approximately 1.18 million MSTR common shares, generating around $164 million in net proceeds. Of this amount, $65.5 million was allocated to Bitcoin, while the remaining $98.5 million bolstered the company’s USD cash balance. As of November 1, Strategy reported holding $132.7 million in cash alongside a robust $4.79 billion US dollar reserve.

This strategic allocation demonstrates that while Bitcoin remains a focal point, the company is also prioritizing liquidity through cash reserves, positioning itself for future opportunities.

STRC Buybacks Outpace Bitcoin Purchases

The recent repurchase of STRC preferred shares is part of a broader trend, with Strategy having spent approximately $664 million on STRC buybacks from October 1 to October 25, compared to only about $72 million on Bitcoin during the same period. This shift in capital allocation indicates a strategic pivot towards reducing preferred equity, especially as the company’s policy restricts new STRC issuance below $100.

As of November 2, STRC shares were trading at $99.22, limiting the company’s ability to issue new preferred shares while the price remains below the threshold.

Financing Terms Will Shape Strategy’s Next Purchases

In the third quarter, Strategy reported a net income of $19.5 billion, bolstered by a $20.9 billion operating gain linked to Bitcoin’s price increase. However, this gain was unrealized and did not provide cash for new acquisitions. Additionally, shareholders recently approved daily dividend accrual for various preferred shares, including STRF, STRC, STRK, and STRD, which will begin implementation in late 2026 and early 2027.

The upcoming filings will reveal whether the proceeds from common-stock sales will continue to support both Bitcoin purchases and cash accumulation, as well as the potential return of STRC to its issuance threshold. While Strategy remains committed to accumulating Bitcoin, the interplay of financing costs and preferred-share retirements will be crucial in shaping its future investment decisions.

FAQ

When did Strategy buy the 811 Bitcoin?
The purchases took place from October 26 through November 1, 2023, as disclosed in the November 2 filing.

What was Strategy’s average purchase price per Bitcoin?
The latest batch cost an average of $80,846 per BTC, while the overall average acquisition cost across its Bitcoin treasury is $75,451 per coin.

How did Strategy fund the latest Bitcoin purchase?
The acquisition was financed through proceeds from the sale of approximately 1.18 million MSTR common shares, raising about $164 million.

How much STRC preferred stock did Strategy repurchase?
The latest disclosed repurchase totaled $208.2 million, following approximately $664 million spent on STRC buybacks from October 1 to October 25.

How much Bitcoin does Strategy hold after the acquisition?
Following the purchase, Strategy’s treasury reached 849,327 BTC, with an aggregate acquisition cost of approximately $64.1 billion.

This article is for informational purposes only and does not constitute financial advice.