Michael Saylor, Executive Chairman of Strategy Inc. (Nasdaq: MSTR), stated in a July 27th post on X that future share repurchases of STRC could be funded through sales of Bitcoin or MSTR shares, depending on market conditions. STRC are Strategy's Series A Variable-Rate Perpetual Preferred Shares with a $100 liquidation preference, whose dividend rate is reviewed monthly by management.
Selling Bitcoin could become an attractive financing option when the price of STRC is trading significantly below $100, allowing the company to repurchase the preferred shares at a discount.
Saylor stated that the company aims to maintain STRC trading at a level close to its $100 liquidation preference, with high liquidity, low volatility, and stable independent demand. As part of Strategy's digital hybrid capital concept, the company does not intend to issue additional STRC shares below $100.
Discount Repurchases Dictate Purchase Pace
During the week ended July 26, the company repurchased 288,930 STRC shares for approximately $25 million at an average price of $86.52 per share, as reported by the company on July 27.
Saylor presented Strategy as a regular and disciplined buyer when the price is below $100, with repurchase volumes increasing at larger discounts and tapering as STRC approaches its stated preference. Under the repurchase authorization for preferred securities, approximately $975 million remains available, providing management with significant capacity for future transactions. At the latest average purchase price, the company acquired each STRC share at a $13.48 discount to its stated preference before accounting for future dividend savings.
Strategy's President & CEO, Phong Le, explained:
"At prices below $100 per share, repurchasing STRC shares represents an attractive capital investment as it allows for the reduction of future preferred dividend obligations at a discount."
"We intend to adjust purchase volumes based on both price and liquidity — increasing them at larger discounts and decreasing them as the market price of STRC shares approaches the $100 per share mark — while allowing independent market demand to form a healthy and sustainable market," he added.
In the terms of the STRC shares and the dividend policy, the current annualized dividend rate is stated as 12%, along with factors management considers during monthly assessments.
U.S. Dollar Reserve Remains Separate from Repurchase Program
Additionally, Strategy increased its U.S. dollar reserve by $525 million through the sale of MSTR common shares, bringing its balance to a record $3.75 billion. This reserve covers approximately 25 months of expected preferred dividend payments and, per a policy approved by Strategy's board of directors, remains designated exclusively for preferred dividend payments and debt obligations.
This restriction means future STRC repurchases will be funded from other sources, including the sale of MSTR shares and, as noted by Saylor, the sale of Bitcoin when justified by market conditions.
Instead of using the U.S. dollar reserve, Strategy now has two primary channels to fund STRC share repurchases: issuance of MSTR shares and sale of Bitcoin when management deems it economically sensible. This flexibility allows the company to repurchase preferred shares at a discount without impacting funds reserved for dividend payments and debt obligations.
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