TLDR
- Strategy purchased 22,337 BTC last week, marking its fifth largest bitcoin acquisition on record.
- The company raised $1.18 billion through STRC perpetual preferred stock to fund most of the purchase.
- Strategy raised $396 million through its common stock at the market program during the same period.
- The latest acquisition increased Strategy’s total bitcoin holdings to 761,068 BTC.
- STRC carries an 11.5% dividend rate, adding about $135 million in annual dividend obligations from the new issuance.
Strategy has shifted its primary funding tool for bitcoin purchases to perpetual preferred stock. The company disclosed a 22,337 BTC acquisition last week, its fifth-largest on record. It raised $1.18 billion through STRC preferred stock, while common stock sales played a smaller role.
The purchase increased Strategy’s total bitcoin holdings to 761,068 BTC and reflected a funding shift. The company relied mainly on its STRC perpetual preferred stock rather than its common equity program. Management disclosed the figures in its latest filing and confirmed the transaction details.
Strategy Leans on STRC to Fund Bitcoin Accumulation
Strategy purchased 22,337 BTC during the preceding week and disclosed the transaction on Monday. The company funded most of the purchase through $1.18 billion in STRC perpetual preferred stock issuance. That amount equated to roughly 16,800 BTC at an average price of $70,000.
By contrast, Strategy raised $396 million through its common stock at-the-market program. Historically, the company used the ATM program as its primary funding vehicle. However, the latest figures show STRC now leads its capital raising efforts.
Strategy stated that STRC carries an 11.5% dividend rate. The $1.18 billion issuance implies about $135 million in annual dividend obligations. As a result, the company’s total annual dividend burden now exceeds $1 billion.
Dividend Costs Rise as Share Structure Adjusts
Strategy has allocated about $2.25 billion in USD reserves to fund dividend commitments. The reserve aims to cover obligations tied to outstanding preferred stock. Management confirmed the reserve position in its latest disclosure.
The company’s common stock has declined more than 70% from prior levels. This decline appears to reduce incentives for large-scale common equity issuance. Strategy may therefore use common stock more selectively in future capital raises.
Management indicated that it may issue common shares when the multiple to net asset value exceeds 1. The company may also sell common equity to build USD reserves when needed. In practice, this approach reduces reliance on new common share issuance.
STRC has recently traded below its $100 par value. The preferred stock closed below par for three consecutive days after its March 15 ex-dividend date. Its one-month volume-weighted average price has also remained under $100.
Under its terms, STRC allows for dividend adjustments. The company may raise the dividend by 25 basis points if pricing remains below par. Such an increase would aim to support the preferred stock price.
Strategy has not yet announced a formal dividend increase. However, market pricing suggests potential action under the existing framework. The company continues to fund bitcoin accumulation primarily through its preferred capital base.
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Source: https://blockonomi.com/strategy-funds-22337-btc-buy-with-1-18b-strc-issuance/
