Strategy Abandons Bitcoin Purchases, Repurchases Preferred Shares Instead
Strategy, a company known for its bitcoin purchases and share issuances, has made a surprising move. For two consecutive weeks, the company has not bought or sold any bitcoin, nor issued new shares. Instead, it used $139.3 million of cash to repurchase 1,420,467 preferred shares from its own stock at an average price of $98.57 per share.
The repurchased shares have a face value of $100 each and carry a 12% annualized dividend obligation. By buying them back below par, Strategy is effectively retiring future dividend obligations at a discount, which is a more attractive return on investment compared to purchasing bitcoin at current prices.
Strategy's bitcoin holdings remain unchanged at 845,050 BTC, acquired for $63.73 billion at an average price of $75,412 per coin. The company still has available funds for future preferred stock repurchases, with about $1.05 billion remaining under its separate common stock programme and another $1 billion allocated for this purpose.
The absence of new share issuances is a significant change from Strategy's previous behavior, where it issued equity to fund preferred dividends and accumulate bitcoin. This shift has sparked speculation among analysts about the company's strategy and capital allocation decisions.