Foreign media commented that Strategy has not bought or sold Bitcoin in the past two weeks, nor has it sold stocks through the ATM plan. Unlike previous disclosures of increasing Bitcoin holdings on a weekly basis, this time the company has used more funds for the repurchase of preferred stocks. The market is concerned to see if there has been a change in the focus of its capital allocation.
Position unchanged; cash is used for repurchase.
According to the 8-K filing submitted on September 14 by Strategy, from September 8 to 13, the company's Bitcoin holdings remained unchanged at 845,050 coins, with a total purchase cost of approximately $63.73 billion and an average cost of about $75,412 per coin.
During the same period, the company did not sell any Bitcoin, nor did it issue any common shares under the ATM market issuance plan. Instead, the company used approximately $139.3 million in cash to repurchase 1,420,467 of its own preferred shares. The week prior to that, the company had also repurchased about $176.3 million in preferred shares.
The documents show that the company's cash in US dollars has dropped to $1.3 billion, while the dedicated US dollar reserves are maintained at $5.1 billion, with total US dollar assets amounting to approximately $6.4 billion. The current remaining authorization includes about $1.05 billion for preferred stock repurchases and $1 billion for common stock repurchases.
Comments focus on changes in the use of funds
The article argues that if the outside world only interprets this as a “pause in buying Bitcoin,” it may be underestimating the change itself. What is more noteworthy is that the company has begun to use cash to adjust its capital structure without increasing its holdings of Bitcoin or issuing new shares.
According to the analysis in the text, there are usually three explanations for such pauses: first, the financing conditions are not ideal, and it is temporarily impossible to continue buying coins; second, the management believes that the current price is not suitable for further increases in holdings; third, the company determines that there are more cost-effective ways to use funds at this stage than buying coins.
The article tends to support the third explanation. The reason is that if the trading price of preferred stocks is lower than their par value, and the company repurchases such securities, it can not only reduce future dividend payments but also cancel liabilities at a discount. It is mentioned in the text that since September, STRC has an annualized dividend of about 12%, therefore repurchasing them at a price below par value can directly reduce subsequent cash burdens.
ATM Stop using it to attract attention
The article also points out that Strategy has not used ATM for financing for a consecutive period, which is another signal that deserves more attention. A more optimistic interpretation is that the company does not wish to continue diluting the equity of common shareholders at the current valuation level; a more cautious interpretation is that with the main financing tool of the company temporarily unavailable, the external financial leverage that can be utilized is decreasing.
From the disclosed data, it can be seen that this week's repurchase funds mainly came from operating cash, rather than from a dedicated reserve account. The article argues that this approach may be sustainable in the short term, but if ATM is not restarted for an extended period, and the company does not dispose of other assets, the cash available will eventually be limited.
The issue of index inclusion is also fermenting simultaneously.
In addition to share repurchases and the suspension of new share issuances, the article also mentions another concurrent change. At the beginning of September, Michael Saylor and CEO Phong Le requested that MSCI revoke a rule that could affect Strategy's inclusion in its global index system.
The article argues that if a stock loses its qualification as an index component, the mechanical buying pressure exerted by passive funds may diminish. For Strategy, which has long relied on market premium financing, this would affect the demand structure for its shares and also impact its ability to support the expansion of its Bitcoin treasury through equity instruments in the future.
Combining these actions, the article argues that Strategy is currently more focused on maintaining the stability of its capital structure, including repurchasing preferred stocks, striving to retain its index qualification, and suspending the dilution of common stocks, rather than continuing with a high-frequency increase in its holdings of Bitcoin.
Additional information:Strategy Last time it disclosed a Bitcoin purchase was on August 31st, when the company bought 4,603 Bitcoins for approximately $370 million.
