Michael Saylor, the executive chairman at Strategy, has always played the long game with Bitcoin. It’s a strategy, if you’ll pardon the pun, that has seen the company amass a truly significant amount of the digital asset. But how does a company keep buying Bitcoin, especially in such large quantities? It often comes down to clever financial engineering, and Saylor just unveiled his latest move.
- Strategy recently completed a $2.5 billion preferred stock sale, dubbed STRC, to acquire more Bitcoin.
- STRC is designed to be senior in rank and aims for low volatility, providing a new avenue for Strategy’s Bitcoin acquisitions.
- The offering’s success highlights strong investor interest in instruments tied to Strategy’s Bitcoin-focused strategy.
Strategy recently wrapped up what looks like its biggest preferred stock sale yet. This new offering, dubbed STRC or “Stretch,” joins a family of other preferred shares like STRD, STRF, and STRK. Think of it as Saylor building out his own unique credit yield curve, adding another layer to how Strategy funds its Bitcoin acquisitions.
The Latest Play in Saylor’s Book
The STRC offering stands out. It’s designed to be senior in rank, meaning it gets paid back before some other types of investments if things go sideways. It also aims for low volatility, a rare bird in the crypto-adjacent world. This particular “Stretch” adds a short-duration option to Strategy’s financing mix, giving them more ways to bring in capital for those Bitcoin buys.
Just a few days before this deal finalized, Strategy had announced a goal of raising $500 million. But Saylor, never one to think small, took to X to share the final numbers. The deal ballooned far beyond that initial target, reaching a staggering $2.50 billion.
Saylor announced the deal involved 28 million shares, each priced at $90. This massive increase from the initial target highlights Strategy’s unwavering commitment to expanding its Bitcoin holdings, no matter the cost. It’s a bold move, even for him.
This kind of aggressive fundraising isn’t new for Strategy. They’ve been using various debt and equity offerings for years to fuel their Bitcoin accumulation. The sheer scale of this latest offering, however, certainly turns heads. It shows a strong appetite from investors for instruments tied to Strategy’s Bitcoin-centric vision.
A New Tool for Yield Seekers
So, what exactly is STRC offering to investors? It’s a perpetual preferred stock. This means it doesn’t have a set maturity date, unlike a bond. It pays a variable monthly dividend, which at the time of the offering, translated to an effective yield of 9.5% to 10.0%. That’s a pretty attractive number for investors looking for regular income.
One interesting aspect of STRC is its built-in mechanisms to keep its trading price close to $100. Imagine a thermostat for the stock price. If STRC trades below $99, Strategy can raise the dividend or halt new sales. If it climbs above $101, they can issue new shares or call (redeem) the stock above its par value.
These levers are designed to create a self-correcting system. It aims to offer stability while still providing compelling returns, especially in today’s interest rate environment. The dividend adjustments are also capped, with step-downs limited to 25 basis points plus any maximum decline in the one-month secured overnight financing rate (SOFR) over the period.
When you compare STRC to more conventional short-duration credit options, it really stands out. Money market funds and Treasury bills might offer around 4%. STRC, with its 9.5% to 10.0% effective yield, offers more than double that. It’s clearly targeting investors who want higher income without taking on too much price fluctuation. This positions it quite well against traditional instruments like commercial paper or even bank deposits.
Strategy’s latest move with STRC isn’t just about raising capital. It’s a calculated step to diversify its funding sources, making it more resilient. It also offers a glimpse into how a company can marry traditional finance tools with a bold, Bitcoin-first corporate strategy. It will be interesting to see how this new layer of the yield curve plays out for Strategy and its ongoing quest for more Bitcoin.