Michael Saylor-led Strategy, formerly MicroStrategy, bought 1,665 Bitcoin for $142.7 million in the week ended September 27, marking its second consecutive week of purchases after a three-month stretch without back-to-back weekly buying. The average purchase price was $85,681 per Bitcoin. The company bought another 950 Bitcoin for $75.7 million the previous week, bringing its two-week total to 2,615 Bitcoin as it resumed accumulation after selling part of its holdings earlier in the quarter.
Bitcoin holdings reach a record 847,666
Last week's purchase was about 75% larger than the previous week's. Earlier sales had pushed Strategy's net Bitcoin accumulation for the quarter into negative territory, but the two latest purchases reversed that trend. With three trading days remaining before the quarter ended as of September 28, the company had recorded net additions of about 1,666 Bitcoin in the third quarter.
Bitcoin analyst Mark Harvey said Strategy had repurchased the Bitcoin it sold during the quarter and added to its holdings beyond that level. Based on his calculations, the company has now posted quarterly net Bitcoin additions for 24 consecutive quarters.
Strategy holds 847,666 Bitcoin, a record high. Its cumulative purchase cost is about $63.9 billion, or an average of $75,437 per Bitcoin. The company has bought 175,166 Bitcoin this year. Based on a current valuation of about $70.7 billion, the holdings have an unrealized gain of roughly $6.75 billion, or about 10.6%, relative to their aggregate cost.
Those figures differ from Strategy's periodic performance measures. The company reported a year-to-date Bitcoin yield of -3.7% and a negative BTC Gain of 25,085 Bitcoin, equivalent to a reported loss of about $2.1 billion at the price used in its calculation. Third-quarter BTC Gain was negative 100,275 Bitcoin, or about $8.37 billion. The unrealized gain on the holdings should not be conflated with these period-based metrics.
Equity issuance funds Bitcoin purchases and STRC buybacks
Strategy funded its latest Bitcoin purchase partly through at-the-market sales of common stock. Last week, it sold about 1.47 million MSTR shares and raised $246.2 million net. The program still has $18.84 billion of available capacity.
MSTR analyst Zaid had estimated that Strategy could spend $250 million to $300 million on Bitcoin during the week, roughly twice the amount ultimately spent. He said the lower purchase amount indicated that management allocated part of the capital to other uses rather than relying more heavily on the company's cash balance.
One of those uses was the repurchase of STRC. Strategy bought back about 1.53 million shares of its Class A perpetual floating-rate preferred stock for $151.7 million, slightly more than it spent on Bitcoin during the same period. Of the buyback funding, $103.5 million came from the MSTR share issuance and $48.1 million from its U.S. dollar cash balance. The company also allocated $22.1 million from its dollar reserves to preferred-stock dividend payments.
As of September 27, Strategy held about $1 billion in general-purpose cash and a separate $5 billion dollar reserve. Zaid estimated that the company's buybacks represented about 18.9% of total STRC trading volume last week, down from 22.8% the week before. The decline indicates that Strategy accounted for a smaller share of the market selling absorbed to support the security's price, although its repurchases remained a significant part of trading activity.
STRC moves back toward $100 as daily dividends go to a vote
STRC recently rose to about $99, close to its $100 liquidation preference. The security had struggled to hold that level since May and fell to roughly $71 during the June Bitcoin sell-off. Under a $2 billion repurchase program, Strategy has since spent more than $1 billion buying back preferred shares in an effort to stabilize their market price.
STRC currently carries an annualized dividend rate of 12%. In June, Strategy changed the payment schedule from monthly to twice a month. It now plans to revise the schedule again to make the security more attractive to income-focused investors.
Strategy will hold a special shareholder meeting on October 28 to seek approval for daily dividends on its four U.S.-listed preferred securities: STRC, STRF, STRK and STRD. Under the proposal, STRC would be the first to adopt the new schedule, with its first daily-schedule dividend expected to be paid on November 2. The record date would be November 1.
The company said daily accrual could reduce the time investors wait to receive and reinvest dividends, while also easing price fluctuations that may occur around less frequent payment dates. Keeping STRC near its $100 level is one of the stated objectives of the plan. As the quarter closes, Strategy's next disclosures will show whether it records a third straight week of Bitcoin purchases and whether buybacks and the proposed daily dividend schedule continue to support STRC's price.