Stock Sale Lifts Liquidity as Preferred Securities Trade Below Par
Strategy sold $263.5 million in common stock last week and lifted its US dollar reserve to $3.225 billion, marking a deliberate shift toward cash accumulation after four consecutive weeks without Bitcoin purchases.
The Michael Saylor-led Bitcoin treasury company issued 2.73 million Class A shares between July 13 and 19, according to an SEC filing dated July 20. The stock sale added $225 million to Strategy’s designated reserve. The company’s Bitcoin holdings remained unchanged at 843,775 BTC during the pause in acquisitions.
Strategy’s last Bitcoin purchase occurred on June 22, when the company bought 520 BTC for approximately $35 million at an average price of $67,068 per coin. Between June 29 and July 5, Strategy sold 3,588 BTC for roughly $216 million, generating liquidity ahead of the preferred-stock capital structure.
Preferred Securities Under Pressure
Strategy’s flagship preferred security, Stretch (STRC), has traded below its $100 stated value since mid-May. The security recently traded near $87 after falling to approximately $75 in late June. The preferred stock carries a 12% variable annual dividend.
Strategy’s board approved a 12-month minimum cash reserve policy in June. At the current $3.225 billion reserve level, the company holds sufficient liquidity to cover approximately 22 months of its expected $1.76 billion in annual dividends and interest expense on preferred obligations.
Year-to-Date Gains Offset Quarterly Decline
Strategy’s quarter-to-date Bitcoin performance declined 2.3%, reflecting a loss of 19,247 BTC in yield and a negative $1.2 billion in dollar gains. The company’s total cost basis on Bitcoin holdings stands at $63.7 billion against a current market value of $54 billion, representing a $9.4 billion unrealized loss.
Year-to-date metrics remain positive. Strategy has gained 39,325 BTC in yield, a 5.8% increase, with $2.5 billion in dollar gains since the start of the year.
Capital-Markets Engine and Dilution Debate
Strategy has historically used preferred-stock offerings to finance Bitcoin acquisitions. Dylan LeClair, Bitcoin strategy executive at Metaplanet, said a recovery in preferred securities valuations could restart that cycle: “A recovery in the preferred securities could narrow credit spreads and return them to prices at which management is willing to issue more shares, reviving the capital-markets engine Strategy has used to finance Bitcoin purchases.”
Adam Livingston, a Strategy-focused analyst, has argued that dilution calculations overstate the impact of recent capital raises. Under the Common Equity Bitcoin Exposure (CEBE) metric including all net proceeds from the stock sale, the transaction was 0.036% accretive to existing shareholders, Livingston contends.
Strategy is the world’s largest corporate holder of Bitcoin.
