Strategy buybacks push STRC preferred shares near $100

Strategy’s STRC preferred shares have recovered to nearly their $100 offering price after the company repurchased about 9.96 million shares for roughly $950 million between July 20 and Sept. 13.

The buybacks helped the security rebound as high as $99 after a crypto-market selloff pushed it close to $70. Strategy used proceeds from sales of its common MSTR shares to fund roughly $765 million, or about 80%, of the repurchases. Bitcoin sales funded another $161 million.

STRC was designed to broaden Strategy’s Bitcoin-financing model beyond its volatile common stock. The preferred security is meant to provide a repeat source of capital, but that strategy depends on investors being willing to buy the shares at or above their $100 face value.

The recovery has raised questions about whether STRC can hold near par without Strategy remaining one of its largest buyers. 

Strategy’s common stock has fallen about 60% over the past year, while the company doubled its authorization for repurchases of its digital-credit securities to $2 billion.

Analysts said the buybacks can reduce Strategy’s future funding costs if the preferred shares return to par and the dividend rate can eventually be lowered. 

But the purchases also show that a financing model intended to reduce reliance on common-stock issuance has turned back to MSTR sales to support the preferred security.

Strategy’s next test is whether STRC can again become a funding tool for Bitcoin purchases without continued heavy support from the company itself.