Strategy’s latest purchase was funded primarily through the issuance of common stock, accounting for 97% of the $264 million that it raised. Meanwhile, the company issued more of its variable rate, or STRC, preferred stock, which entails monthly dividend payments.
When STRC trades above $100, Strategy has signaled that it will issue more of the preferred stock to keep its price within that range—while using the proceeds to buy Bitcoin. On Monday, STRC was valued $99.50, after climbing above the threshold in previous weeks.
The company measures success by looking at how much the amount of Bitcoin that it owns per share has increased over a given period of time, or BTC Yield. When mNAV, or multiple-to-net asset value, is above a value of 1, issuing common stock to buy Bitcoin has a positive effect.
Strategy’s mNAV stood at 1.08 on Monday. Following its $2.1 billion Bitcoin purchase last week, the company showed that it can still accumulate Bitcoin in size despite being valued at a razor-thin premium to its holdings, according to TD Cowen Analyst Lance Vitanza.
“While the purchases were funded primarily from equity issued close to parity, the week’s activity created meaningful BTC yield,” he wrote, predicting that the Bitcoin-buying firm will continue to ramp up purchases in relation to the asset’s slide.
“We expect more of the same,” he added. “So long as the price of Bitcoin remains depressed, Strategy will be more aggressive in issuing common and preferred equity securities at a given price, relative to last summer when Bitcoin was making new highs.”
