Strategy Spends Big on Preferred Stock Instead of Buying More Bitcoin

Strategy, a company built around accumulating Bitcoin (BTC), has made an unusual move. This week, it spent $176.3 million buying back its own preferred stock, STRC, instead of purchasing more BTC. The decision raises questions about the company's priorities and whether management sees more value in repurchasing expensive debt at a discount than in adding to its Bitcoin holdings.

Strategy has been on a pause from buying new BTC for roughly 10 weeks. During this time, it sold about 7,000 coins at prices between $59,000 and $64,000 before purchasing 4,603 coins at an average price of $80,318. However, the latest purchase is already underwater, below its entry price.

The repurchase of STRC follows a doubling of the company's Digital Credit Securities Repurchase Program from $1 billion to $2 billion. This program authorizes Strategy to buy back STRC when it trades below its $100 par value. With the recent purchase, roughly $1.19 billion remains available under the expanded authorization.

Strategy has now spent around $811.5 million repurchasing STRC since the buyback campaign began in July. The company is using existing cash rather than issuing new shares, which reduces dilution pressure on MSTR holders. Management can argue that it's improving the capital structure without taking money set aside for preferred dividends and interest.