Strategy did not purchase any Bitcoin between October 19 and 25. A first break after several weeks of accumulation. Michael Saylor’s company opted to spend $204.9 million on repurchasing its STRC preferred stock, according to its Oct. 26 SEC filing. Its reserve remains unchanged at 848,517 BTC, while its available cash fell to $242.4 million from $447.3 million a week ago.
In brief
- Strategy halts its Bitcoin purchases after several weeks of acquisitions.
- The company is buying back 2.07 million STRC shares for $204.9 million.
- Its available liquidity fell by almost 46% in one week.
Strategy pauses its Bitcoin purchases
Strategy’s latest weekly report contrasts with previous ones. Between October 19 and 25, the company did not purchase any Bitcoin. It also did not sell any and did not issue any shares under its market sales program, called ATM.
A week earlier, Strategy purchased another 267 bitcoins for $22.1 million. The company had also acquired 250 BTC the previous week, then 334 BTC in early October. This series has just come to an end. The total reserve remains fixed at 848,517 BTC, acquired for approximately $64.02 billion. The average purchase price reaches $75,446 per Bitcoin, including fees.
This represents a little more than 4% of the 21 million bitcoins that may exist. But the real surprise is in the spending. While Strategy invested zero dollars in new BTC during the week, it used $204.9 million to repurchase 2,068,459 STRC shares.
The amount exceeds that of previous weekly operations. Strategy is not officially renouncing its Bitcoin accumulation program. Its regulatory document only describes the operations carried out during this period.
STRC redemptions far exceed BTC purchases
STRC shares now occupy an important place in Strategy’s financial management. These preferred floating rate securities, also called Stretchpay regular dividends. Strategy seeks in particular to support their quotation around their nominal value of 100 dollars.
The group had already doubled its buyback program in September after devoting $176 million to STRC. The movement accelerated in October.
Over the last three weeks, the amounts devoted to STRC redemptions reached:
- $192.4 million from October 5-11.
- 193.1 million from October 12 to 18.
- 204.9 million from October 19 to 25.
Total: $590.4 million. During these three weeks, Strategy only spent $43.6 million to purchase an additional 517 BTC. STRC redemptions therefore represent 13.5 times the spending devoted to Bitcoin over this period.
The gap is considerable. Strategy still retains $956.8 million authorization available in its preferred securities repurchase program, recently increased to $3 billion. Another billion-dollar program exists for MSTR common stock. No shares in this category were repurchased during the last week.
Strategy loses almost half of its available cash
The spending on STRC directly reduced the company’s cash flow. As of October 18, Strategy had $447.3 million in USD Cash. Seven days later, this amount reached only 242.4 million. The decrease represents $204.9 million, or approximately 45.8%. This cash is used in particular for purchases of Bitcoin, redemptions of securities and other financial operations of the group.
Strategy, however, has a second distinct caveat. Her USD Reserveintended for the payment of preferred dividends and debt interest, remains unchanged at $4.83 billion. Adding the two buckets together, the company has approximately $5.07 billion in dollar assets.
The situation also comes at a delicate time for its action. On Oct. 15, MSCI approved new rules that could exclude certain companies whose balance sheets more closely resemble those of an investment vehicle than an operating company.
Strategy is among the companies potentially affected. An exclusion could force index funds to sell MSTR shares. However, it would not force Strategy to sell its bitcoins. The schedule is known: MSCI must publish its final decision on November 11, before possible application after the close on November 30. No direct link has been established between this threat and the weekly suspension of Bitcoin purchases. For now, Michael Saylor keeps his 848,517 BTC. Above all, the company continues to mobilize its dollars to support its own financial instruments.
Maximize your Tremplin.io experience with our ‘Read to Earn’ program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
