Summary: Strategy Inc. bought nearly $1.6 billion worth of Bitcoin between March 9 and last Sunday, acquiring 22,337 coins. The company funded approximately $400 million of that acquisition with proceeds from common stock sales and covered the remaining $1.2 billion through at-the-market sales of its Stretch perpetual preferred shares. The Stretch securities are dividend-paying, have no maturity date, and carry an 11.5% annual payout backed by Strategy's Bitcoin holdings.
Strategy Inc. - the company previously known as MicroStrategy - recorded its largest Bitcoin purchase since January in a filing made public on Monday. The acquisition totaled 22,337 Bitcoin and was executed over the window beginning March 9 and ending last Sunday.
Of the total consideration, about $400 million came from sales of the companys common equity. The remaining $1.2 billion was generated through at-the-market transactions involving the firm's Stretch perpetual preferred shares, marking an increased use of that instrument for the latest round of purchases.
The Stretch securities function as dividend-paying instruments that the company describes as similar to bonds that never mature. They are structured to provide investors an 11.5% annual payout and are backed by Strategy Inc.s Bitcoin holdings, according to the filing.
Last week represented the largest single sale of Stretch securities since the issue's July initial public offering. It was also the first time in several weeks that Strategy relied primarily on Stretch to finance its Bitcoin purchases, the filing shows.
Throughout the period in question, Strategy has been promoting the Stretch securities as a means for both investors and corporations to obtain exposure to Bitcoin without directly assuming the cryptocurrencys price swings. The company has designed a multi-pronged funding approach that blends debt, preferred stock, and equity to support its Bitcoin acquisition strategy.
Each of those funding instruments presents investors with a distinct mix of risk and return, the company notes, and they are all being used as sources of capital to buy additional Bitcoin.
Key points
- Strategy Inc. acquired 22,337 Bitcoin between March 9 and last Sunday, spending nearly $1.6 billion.
- About $400 million of the purchase was funded by common stock sales and $1.2 billion by at-the-market sales of Stretch perpetual preferred shares.
- The Stretch securities pay an 11.5% annual dividend, are perpetual in nature, and are described as backed by the company's Bitcoin holdings; the company has positioned them as a way for investors and corporations to gain Bitcoin exposure without holding the asset directly.
Sectors impacted: Cryptocurrency markets; corporate finance and capital markets; investor products tied to digital assets.
Risks and uncertainties
- Different funding instruments carry varying risk-return profiles - the company uses debt, preferred stock, and equity to buy Bitcoin, and each offers investors a distinct combination of risk and reward.
- The Stretch securities are perpetual instruments that promise an 11.5% annual payout - their never-maturing structure affects investor capital dynamics compared with traditional fixed-maturity debt.
- Last week's sale was the largest Stretch issuance since the July IPO and marked the first time in weeks the firm relied chiefly on Stretch to fund purchases, indicating a change in the company's recent funding mix.
Notes: The figures and descriptions above are taken from the company's regulatory filing covering the March 9 through last Sunday period. The company has publicly presented the Stretch securities as backed by its Bitcoin holdings and as a vehicle for exposure to Bitcoin without taking direct custody of the cryptocurrency.