Strategy Invests $950M in Preferred Shares Amid Bitcoin Reserves

World's largest Bitcoin reserve company Strategy has invested $950 million in buying back its preferred shares over the past two months, according to Bloomberg.

The company purchased approximately 9.96 million STRC shares for $950 million between July 20 and August 13, representing about 18% of total STRC trading volume during that period.

STRC is a perpetual preferred share issued by Strategy to raise funds for Bitcoin purchases since late last year. Chairman Michael Saylor has stated his intention to make STRC a sustainable financial product.

However, after Strategy sold some Bitcoin in June, STRC prices dropped to around $70. Thanks to the company's large-scale repurchases, STRC has now risen to the high $90s, nearing its par value of $100.

Restoring STRC to par value is critical for Strategy's funding strategy, as a significant discount from par would make it harder to issue new preferred shares without increasing burden on existing shareholders.

The problem is that much of the funds used to support STRC prices came from common stock sales. Bloomberg reports that approximately $765 million of the $950 million spent on repurchases—about 80%—was raised through selling common stock or cash generated from such sales.

Strategy's common shares have fallen nearly 60% over the past year, which analysts say is related to this context. Alexander Bloom, CEO of Toupref, told Bloomberg that Strategy is currently selling common stock to buy STRC rather than Bitcoin.