Strategy Adds to Bitcoin Holdings, Boosts Share Buyback Program
NEW YORK – October 19, 2023 – Bitcoin treasury leader Strategy announced today in a filing with the Securities and Exchange Commission (SEC) that it acquired an additional 267 bitcoins last week for $22.1 million, bringing its total holdings to 848,517 bitcoins. Concurrently, the company spent $193 million repurchasing STRC preferred stock and expanded its digital credit securities repurchase program by $1 billion, from $2 billion to $3 billion.
This latest acquisition follows a period of significant activity for Strategy, formerly known as MicroStrategy. In the preceding week, the company had purchased 250 bitcoins and repurchased $192 million in STRC.
Expanded Share Repurchase Authority
The company’s board of directors also approved an increase of $1 billion to the digital credit securities repurchase program. This marks the second expansion of the program since its inception in June.
According to the 8-K filing, Strategy purchased 267 bitcoins during the reporting period for a total cost of $22.1 million, averaging $82,900 per bitcoin, including fees and expenses. The funds for this purchase were generated from the net proceeds of $22 million from the sale of 140,872 shares of MSTR common stock under its at-the-market (ATM) equity issuance program, with an additional $100,000 coming from U.S. dollar cash reserves. No shares of its preferred stock (STRF, STRC, STRK, STRD) were sold during this period.
As of October 18, Strategy holds a total of 848,517 bitcoins, acquired at an aggregate cost of $64.02 billion, with an average cost of $75,446 per bitcoin. The average purchase price this week was lower than the previous week’s average of $86,194 and also below the $85,838.8 average from October 1st to 4th. In total, the company has acquired 851 bitcoins across three filings since the beginning of October.
Based on a bitcoin price of approximately $82,297 as of 8:06 PM Taipei time on October 19th, Strategy’s bitcoin holdings are valued at roughly $69.83 billion. This represents an unrealized gain of approximately $5.81 billion, or about 9.1%, above its cumulative cost. According to Strategy’s official website, its bitcoin yield for the fourth quarter to date is 0.0%, and year-to-date it stands at -3.7%.
Significant STRC Repurchases
During the reporting period, Strategy used $193.1 million in U.S. dollar cash to repurchase 1,938,780 shares of STRC, at an average price of approximately $99.60 per share. The digital credit securities repurchase program, initially capped at $1 billion when established on June 29th, was raised to $2 billion on September 8th and has now been further expanded to $3 billion, inclusive of repurchases already executed.
Notably, as of October 11th, the program had only $354.8 million remaining. After the latest repurchases, approximately $160 million would have been left before the expansion. Following the increase, the remaining capacity now stands at $1.16 billion, indicating that approximately $1.84 billion has been utilized under the program to date. The company’s $1 billion MSTR common stock repurchase program remains fully unutilized, according to the filings.
Strategy had previously stated in an October 16th 8-K filing that management would recommend maintaining the annualized 12% dividend for STRC until the security demonstrates stable and healthy trading around the $100 mark. Amendments to shift to daily dividend payments will be put to a vote at a special shareholder meeting on October 28th.
Cash Reserves and Allocation
The filings indicate that Strategy utilized $45.5 million from its U.S. dollar reserves to pay preferred stock dividends during the period. U.S. dollar cash was used for the $193.1 million STRC repurchase and $100,000 for bitcoin acquisition. As of October 18th, U.S. dollar reserves stood at $4.83 billion, with $447.3 million in U.S. dollar cash, totaling approximately $5.28 billion. This figure aligns with the “approximately $5.3 billion in U.S. dollar assets” mentioned in the previous report. Compared to October 11th, when reserves were $4.88 billion and cash was $640.5 million, U.S. dollar cash decreased by approximately 30% week-over-week.
Cumulatively, Strategy has allocated $459.2 million to STRC repurchases in October, which is more than six times the amount spent on acquiring bitcoin during the same period (approximately $72.3 million). This suggests that the company, which identifies itself as the world’s largest bitcoin treasury, has prioritized STRC repurchases in its recent capital allocation. The latest expansion of the repurchase program by $1 billion, coupled with the upcoming shareholder vote on daily dividend payments for STRC, will directly impact the interests of STRC holders.
