Million

Cash

Bitcoin

Wednesday

MSTR

<p>Strategy bought no Bitcoin last week. It spent $204.9 million repurchasing 2.07 million shares of its STRC preferred stock instead. The buybacks cut its USD Cash balance by 46% to $242.4 million, according to a Monday SEC filing.</p>
<p>Holdings stayed at 848,517 BTC, bought for $64.02 billion at an average of $75,446 per coin. Bitcoin traded near $79,992 at Monday’s US open. That puts the stack roughly $3.8 billion above cost, by our calculation. The company also sold no common stock through its at-the-market program.</p>
<h3 id="what-strc-is-and-why-it-matters">What STRC Is and Why It Matters</h3>
<p>STRC, or Stretch, is a variable-rate perpetual preferred stock with a $100 stated value. It pays a 12% annual dividend twice a month. About $9.3 billion is outstanding.</p>
<p>Strategy sells STRC to raise money for Bitcoin. That only works while the shares trade near $100. Below par, new issuance dilutes the company, so the buyback is a way to defend the price.</p>
<h3 id="how-the-buybacks-began">How the Buybacks Began</h3>
<p>STRC fell to a low of $71.25 in June as Bitcoin weakened. On June 29, Strategy introduced a capital framework that allowed Bitcoin sales to fund dividends. The dividend rose to 12% on Aug. 1.</p>
<p>On July 27, Strategy repurchased $25 million of STRC at an average of $86.52. Saylor wrote that the company would remain a “regular, disciplined buyer of STRC below $100.” He said it would buy more at deeper discounts and less near par.</p>
<h3 id="from-small-purchases-to-heavy-spending">From Small Purchases to Heavy Spending</h3>
<p>The pace rose through the fall. Between Sept. 28 and Oct. 11, Strategy repurchased $368.7 million of STRC while buying 584 BTC, according to Bitcoin.com News. STRC closed at $99.88 on Oct. 12.</p>
<p>The week before last, Strategy spent $193.1 million on STRC and $22.1 million on 267 BTC. It also raised its preferred buyback authorization to $3 billion from $2 billion.</p>
<p>Since October began, buybacks total about $664 million. Bitcoin purchases total $72.3 million for 851 BTC. The spending ratio is roughly nine to one.</p>
<h3 id="why-no-bitcoin-was-bought">Why No Bitcoin Was Bought</h3>
<p>Strategy has funded recent Bitcoin buys by selling MSTR shares. Last week it sold none. The buyback money came from existing cash.</p>
<p>MSTR fell 2.2% in premarket trading Monday to $142.80. It closed at $138.83 on Oct. 17 after a 9.6% daily drop. A lower share price makes selling stock for Bitcoin less attractive.</p>
<p>The market also gave little help. Bitcoin reached $84,777 on Wednesday, then slid toward $80,000. US spot Bitcoin ETFs took in $301 million last week after two weeks of outflows.</p>
<h3 id="the-dividend-vote-on-oct-28">The Dividend Vote on Oct. 28</h3>
<p>Shareholders vote Wednesday on moving STRC to daily dividends. The first daily record date would be Nov. 1. The total payout would not change.</p>
<p>Strategy says the change should narrow the price drop on ex-dividend dates. The median drop fell to 0.36% under twice-monthly payments from 0.49% under monthly ones. Management plans to keep the 12% rate until STRC shows sustained trading near $100.</p>
<p>The proposal passes only with more than half of the voting power of common shares. Preferred holders cannot vote.</p>
<h3 id="what-works-and-what-does-not">What Works and What Does Not</h3>
<p>The buybacks have worked on price. STRC closed at $99.88 on Oct. 12 and sat at $99.35 premarket Monday. Each share retired below par also removes a future 12% dividend obligation.</p>
<p>The company still holds a $4.83 billion USD Reserve for dividends and interest. It was unchanged last week. At 12%, STRC dividends cost about $1.1 billion a year, by our calculation.</p>
<p>The costs are real. USD Cash has fallen to $242.4 million. Strategy accounted for about 30% of STRC volume in early October, per Bitcoin.com News, so the price leans on its own buying.</p>
<p>Every dollar spent on STRC is a dollar not spent on Bitcoin. That slows the growth in Bitcoin per share that Strategy’s model depends on.</p>
<h3 id="what-to-watch">What to Watch</h3>
<p>Saylor said at ParaFi Investor Day on Oct. 18 that the market is “moving back into a bull market.” He pointed to Bitcoin’s recovery above its 200-day average. Bitcoin has since slipped from its Wednesday high.</p>
<p>Three things now matter. The daily dividend vote decides how STRC trades around payout dates. STRC’s price decides whether buybacks continue at this pace. And MSTR’s price decides whether Strategy can return to buying Bitcoin.</p>

Strategy Skips Bitcoin Purchases and Spends $205 Million on STRC Buybacks

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