Strategy Funds $1 Billion Bitcoin Purchase Using Preferred Shares for First Time
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Michael Saylor's Strategy Inc.
MSTR
is adjusting how it funds its ongoing Bitcoin (BTC-USD) accumulation, with its latest move pointing to a notable shift in capital strategy. For the first time since introducing its high-yield securities in July, the company financed a $1 billion weekly Bitcoin purchase entirely through its Stretch perpetual preferred shares, according to a filing with the US Securities and Exchange Commission. The purchases were made in the seven days ended April 12, reinforcing Strategy's position as the largest corporate holder of Bitcoin.The change comes as the company's traditional equity-based funding approach appears to have become less effective. Strategy had previously relied on issuing common shares, supported by a premium between its stock price and Bitcoin that helped limit dilution during stronger market conditions. That premium has narrowed following Bitcoin's decline from its October peak, which has increased investor sensitivity to dilution. In response, the company has leaned more heavily on preferred shares, which are not dilutive to common shareholders but carry an 11.5% dividend tied to its STRC securities.
This shift introduces a different balance of trade-offs. While it may reduce dilution concerns, it adds fixed financial obligations that could increase pressure during periods of crypto volatility. Strategy had earlier built a $2.25 billion cash reserve during a prior downturn to help manage liquidity risks, and it remains one of the few significant buyers in the current environment as other corporate holders and high net worth individuals reduce exposure. The company holds about $55 billion worth of Bitcoin, while its shares are down roughly 56% over the past year despite a recent 1.6% gain to $130.22, as Bitcoin rose less than 1% to $71,800.
source: https://www.tradingview.com/news/gurufocus:34e47c757094b:0-strategy-funds-1-billion-bitcoin-purchase-using-preferred-shares-for-first-time/
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