Strategy Raised $333.7M From MSTR Share Sales; No Bitcoin Bought

An Aug. 17 SEC filing shows Strategy sold 3.45 million MSTR shares from Aug. 10 through Aug. 16, raising $333.7 million and directing all proceeds to preferred-stock obligations and cash reserves. The company reported it made no Bitcoin purchases during the period and its total holdings remained at 840,447 BTC, acquired for $63.36 billion at an average price of $75,385 per coin.

The filing breaks down the allocation: $52.4 million went to dividends on the Variable Rate Series A Perpetual Stretch preferred stock (STRC), $132.2 million was used to repurchase STRC, and $149.1 million increased Strategy’s U.S. dollar reserve to $4.8 billion.

Strategy has not added to its Bitcoin holdings since June 21. Over the past two months the company sold nearly 7,000 Bitcoin, repurchased about $347 million of STRC and increased cash reserves. Data from Saylortracker shows Strategy’s common shares have fallen roughly 35% over that span, while Bitcoin declined about 10%.

At an investor Q&A on Aug. 17, shareholders asked why common equity was being used to support STRC rather than to increase Bitcoin per share. CEO Phong Le rejected the idea that MSTR had been deprioritized and said restoring value to common shares depends on increasing Bitcoin per share, adding that making STRC work is one of the main ways to pursue that goal. He rejected paying dividends on MSTR and said capital is better used to strengthen the balance sheet and expand the company’s digital-credit business to help finance future Bitcoin purchases. Le said, “The best deployment of capital for us is to get stretched to work to buy Bitcoin and put it on our balance sheet. And that’s ultimately the objective of the company.”

Executive Chairman Michael Saylor described Strategy as being in an investment phase focused on building a credit franchise. He put the company’s cost of funding at roughly 10% to 10.5% and said the financing model depends on Bitcoin outperforming that hurdle rate; if Bitcoin appreciates faster than the cost of funding, large-scale credit issuance could create value for common shareholders.

Management said the preferred stock’s drawdown taught the company to keep sufficient dollar liquidity to backstop dividends and reassure institutional investors. Strategy reported the $4.8 billion reserve provides about 2.8 years of coverage for preferred dividends and interest on debt. Management also indicated future STRC proceeds could remain in dollars rather than being immediately converted into Bitcoin, to preserve a larger liquidity buffer as the credit business grows.

Strategy retains $653 million remaining under its preferred-stock repurchase program and $1 billion under its MSTR repurchase authorization. Management said it would consider repurchasing MSTR if the stock traded at a sufficiently deep discount to net asset value, but at current levels has not treated buybacks as the best use of capital.

The company flagged a proposed MSCI screening change as a potential risk that could remove Strategy from certain MSCI equity indexes, an action the company estimates could trigger about $2.8 billion in passive selling. Strategy estimates MSCI-linked indexes account for roughly 3% to 4% of its shares and plans to challenge the proposal. Management said an exclusion would create selling pressure but described the likely effect as limited. If STRC remains below management’s target range of about $99 to $100 while index-related selling pressures hit MSTR, Strategy could face simultaneous demands on cash for STRC support, MSTR buybacks, debt payments and potential renewed Bitcoin purchases.

Strategy, formerly MicroStrategy, remains the world’s largest corporate Bitcoin holder and continues to use a credit-centered financing approach intended to fund future Bitcoin accumulation.