Strategy Spends $950 Million Buying Preferred Stock Over Two Months, Bringing $100 Par Value Back Into Sight

Strategy, the world’s largest corporate holder of Bitcoin, spent $950 million over the past two months buying back its own preferred stock.

Bloomberg reported on Sept. 16 that the company bought about 9.96 million shares of STRC for $950 million between July 20 and Sept. 13. That was equal to about 18% of total STRC trading volume during the period.

STRC is a perpetual preferred stock that Strategy has issued since the second half of last year to help fund Bitcoin purchases. Chairman Michael Saylor has said he wants to turn STRC into a sustainable financing product.

The shares fell to around $70 after Strategy sold some of its Bitcoin holdings in June. They have since rebounded into the high $90s, helped by the company’s large-scale purchases, putting a return to the $100 par value within reach.

Restoring STRC to par is central to Strategy’s funding strategy. If the preferred stock trades well below par, new issuance becomes more burdensome for existing shareholders and harder to use as a financing tool.

The problem is that much of the money used to support STRC came from common-share sales. Bloomberg said about $765 million of the roughly $950 million Strategy spent on STRC purchases after July 20 was funded by proceeds from common-share sales or cash raised around those sales. That accounted for about 80% of the total.

That also helps explain why Strategy’s common stock has fallen nearly 60% over the past year, Bloomberg said. “Right now, Strategy is selling common shares to buy STRC, not Bitcoin,” Alexander Blume, chief executive officer of Two Prime, told Bloomberg.