Investment company Strategy, focused on Bitcoin, announced recent significant purchases of the cryptocurrency, substantially increasing its holdings.
New Financial Structures for Bitcoin Acquisitions
According to a report submitted to the U.S. Securities and Exchange Commission, Strategy recently acquired 1,955 Bitcoin between September 2nd and 7th. This purchase, made at an average cost of $111,196 per Bitcoin, amounted to an expenditure of approximately $217.4 million. With this acquisition, Strategy’s total Bitcoin holdings have increased significantly, reaching 638,460 BTC, valued at nearly $71 billion.
Strategy’s Bitcoin purchases are financed through at-the-market (ATM) equity sales and a unique array of perpetual preferred shares. The shares, identified by the codes STRK, STRC, STRF, and STRD, offer investors a variety of dividend structures. STRK is convertible and foresees an 8% dividend, while STRF presents a safer profile with a 10% cumulative dividend. STRD is non-convertible with a contingent 10% dividend, representing a high risk-return balance. Additionally, STRC provides flexibility to investors with its variable interest and monthly dividend.
Unexpected Exclusion from S&P 500
In September, Strategy was excluded from the updated S&P 500 index. New additions included Robinhood, AppLovin, and EMCOR Group. As a result, Strategy missed the opportunity to attract billions of dollars in new investor interest through passive funds, despite its prominent market capitalization and trading volume. Bloomberg data indicate that passive funds linked to the S&P 500 index have reached a massive $22 trillion.
Future Market Changes
Following these developments, Nasdaq announced plans to tighten oversight of cryptocurrency-focused companies. The new regulations will require shareholder approval for certain fundraising activities and increase disclosure obligations. Strategy reported that these changes do not affect its ongoing ATM programs and capital market activities. MSTR, the company’s stock, concluded last week up by 2.5%, closing at $335.87. Even though MSTR’s year-to-date return has fallen by 11.9%, it still lags behind the 18.7% gain achieved by Bitcoin in the same period.
The company's strategy for Bitcoin acquisition and capital generation through preferred share sales indicates its ambitious intentions in the cryptocurrency market, despite the exclusion from the S&P 500.
