Strategy hits a 5 week pause on Bitcoin, using $25M to quietly buy back its own discounted stock

Strategy (formerly MicroStrategy) has begun buying back its STRC preferred stock as the Bitcoin treasury company shifts more capital toward supporting its financing structure.

In a July 27 SEC update, Strategy said it purchased 288,930 STRC shares for $25 million between July 20 and July 26, marking the first disclosed use of a $1 billion preferred-stock repurchase program approved last month.

The shares were acquired at an average price of $86.52, a sizeable discount to STRC's $100 stated amount.

The move comes during Strategy's longest pause in its once-regular Bitcoin accumulation. The firm has not purchased a single BTC for the past five weeks, its longest hiatus since 2024.

Despite this pause, the Michael Saylor-led company remains the largest public holder of the top crypto with 843,775 BTC. They were acquired at an average purchase price of $75,476 per Bitcoin, or $63.69 billion.

The STRC repurchase follows a prolonged period of weakness in the variable-rate perpetual preferred stock, which Strategy intends to keep trading close to its $100 stated amount.

STRC fell below $77 over the past month before recovering to around $88 as of press time. Despite the rebound, the security remains well below Strategy's target level, complicating its role as a financing instrument because the company's current policy is not to issue new STRC shares below $100.

Strategy has already tried to support the preferred stock through its dividend policy. STRC currently carries a 12% annualized dividend rate, and management plans to recommend keeping that rate in place until the shares trade sustainably near $100, with stronger liquidity and independent investor demand.

However, the company is now adding direct repurchases to that effort.

Saylor said Strategy intends to remain a "regular, disciplined buyer" of STRC while it trades below $100, with purchases increasing as the discount widens and tapering as the shares move closer to their stated amount.

He added:

Repurchases will be funded outside the USD Reserve, including through MSTR and BTC sales, based on market conditions. Our objective is for STRC to trade near $100 with high liquidity, low volatility, and healthy, sustainable independent demand. We will not issue below $100.

That approach gives Strategy a way to respond directly to market weakness while also taking advantage of the discount.

At last week's average purchase price of $86.52, the company was able to retire STRC at about 86.5 cents for every dollar of stated value.

Chief Executive Phong Le said repurchases below $100 can reduce future preferred dividend obligations while allowing Strategy to remove the securities from its capital structure at a discount.

The economics therefore become more attractive as STRC falls further below $100, giving Strategy an incentive to buy more heavily during periods of deeper weakness.

Strategy still has $975 million available under its Digital Credit Securities Repurchase Program after last week's transaction, leaving substantial capacity for additional purchases if STRC remains discounted.

However, the authorization does not commit Strategy to spending the remaining amount. Future repurchases will depend on STRC's price and liquidity, available capital, and broader market conditions. The company can modify, suspend, or terminate the program.

The STRC buyback addresses the preferred stock's market discount, but Strategy is also increasing the cash available to meet the obligations created by its growing preferred-stock complex.

The company added $525 million to its USD Reserve last week, raising the balance from $3.225 billion to a record $3.75 billion. Strategy said that amount is sufficient to cover roughly 25 months, or 2.1 years, of expected preferred-stock dividend payments.

The additional cash came from another round of MSTR issuance.

Strategy sold 5,429,160 shares of its Class A common stock through its at-the-market program during the week, generating approximately $544.5 million in net proceeds. It transferred most of those proceeds into the reserve.

The company established the USD Reserve to support preferred-stock dividends and interest payments on outstanding debt, creating a dedicated source of liquidity for obligations that continue regardless of Bitcoin's short-term performance.

That function has become more important as Strategy has expanded beyond common equity and convertible debt to finance its Bitcoin holdings through several classes of preferred stock.

Unlike Bitcoin, those securities carry recurring cash obligations. Strategy must therefore maintain enough liquidity to make dividend and interest payments even during periods when capital markets are less favorable or the value of its Bitcoin holdings declines.

The larger reserve extends the period for which Strategy could meet those obligations from cash already on hand, reducing its dependence on raising fresh capital when payments come due.

The larger reserve also complements the company's effort to restore STRC toward $100.

Strategy is effectively addressing two pressures created by the preferred stock from different directions: repurchases can reduce the amount of STRC outstanding when the shares trade at a discount, while the USD Reserve provides greater coverage for dividends across its preferred-stock structure.

That distinction helps explain why Strategy is accumulating cash at the same time it has begun buying back STRC.

The $3.75 billion reserve remains dedicated to servicing preferred dividends and debt interest, while the separate repurchase program gives management another tool for managing securities that trade below the levels it considers sustainable.

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