Strategy raises cash, leaves its Bitcoin stack untouched

Michael Saylor’s Strategy (NASDAQ: MSTR) extended its recent conservative streak of managing its billion-dollar BTC reserve as the firm directed the roughly $467 million it raised last week to its dollar reserve instead of buying Bitcoins, according to a Monday SEC filing. 

The decision, which pushed the firm’s USD Reserve up to $3 billion, could be setting up for an overdue quiet week for a firm that has stayed in the headlines recently for selling from a BTC stash that its vocal chief had consistently insisted would never be sold. 

Cryptopolitan has reported in previous coverage how the firm has drawn criticism and suggestions about the management style of its Bitcoin accumulation playbook. 

How much Bitcoin does Strategy have now?

According to a July 13 Form 8-K, Strategy’s Bitcoin holdings remain unchanged from its previously reported balance at 843,775 BTC. Instead, the $466.7 million it raised went to a $3 billion cash reserve set aside for periodic dividend payments to holders of the firm’s preferred stock.

Notably, unlike last time around, this week’s raise came from selling common stock, which is good news for proponents who would rather not see the firm further capitulate in its “never sell” position.

Strategy still retains a big lead over the next largest corporate Bitcoin holder, but its position is also as deep in the red. With Bitcoin trading near $62,800 on Monday, a firm that paid an average price of $75,476 on its 843,775 BTC, the Michael Saylor-led firm is underwater by billions on its $63.69 billion outlay.

Why does Strategy need to hold cash? 

Strategy carries heavy fixed obligations on its preferred share classes, and the reserve exists to cover them. The company has said the cash supports dividend payments on its preferred stock and interest on its debt.

Those payments are not small. In late June, Strategy adopted a capital framework that raised the annual dividend on its STRC preferred stock, nicknamed “Stretch,” to 12%, its eighth rate increase. 

STRC closed Friday at $87.48 on Nasdaq, below its $100 par value, according to Google Finance. Ripple CEO Brad Garlinghouse called the discount on that stock “a pretty damning indictment” in a CNBC interview, arguing that “financial engineering does not drive long-term value.”

Why did Strategy adapt its accumulation playbook?

The decision to raise cash instead of buying Bitcoin follows a period in which Strategy began doing something it long swore off: selling. 

Between June 29 and July 5, the company sold 3,588 Bitcoins for about $216 million, its largest disposal to date, and directed the proceeds toward preferred-stock distributions. Saylor confirmed the sale on X, writing that the coins were sold “to fund dividends on our Digital Credit securities.”

That framework, laid out in a late-June 8-K, gives management discretion to sell Bitcoin, buy back shares, and hold a formal dollar reserve. It authorized up to $1.25 billion in reserve-building capacity through a Bitcoin monetization program, plus two separate $1 billion repurchase programs for preferred and common shares. 

None of those buttons obligate the company to act. Last week, the firm used none of the Bitcoin capacity and instead leaned on equity sales to top up cash.

The market read the update coolly. MSTR traded down about 3% before Monday’s open, as Bitcoin slipped over the weekend. Google Finance showed the stock around $94.64 at Friday’s close, near the low end of a 52-week range that once reached $457.22.

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