Bitcoin Treasury Firm Strategy Buys 267 BTC in a Week, Repurchases $193.1M of STRC Preferred, Raises Buyback Cap to $3B

What happened this week

Decrypt calls Strategy a "Bitcoin treasury firm," meaning a company that holds bitcoin as its main asset. According to Decrypt, citing an SEC (U.S. Securities and Exchange Commission) filing and the company's Monday update, Strategy bought 267 bitcoin between Oct. 12 and 18 for $22.1 million, while repurchasing $193.1 million of STRC preferred stock. It now holds 848,517 bitcoin.

Decrypt reports the bitcoin purchase was funded mainly by $22 million raised by selling 140,872 MSTR common shares through an at-the-market (ATM) program, plus $0.1 million in cash. An ATM program lets a company raise money by selling new shares gradually in the market at prevailing prices. The report also says Strategy sold no preferred stock that week.

STRC buyback and funding source

Preferred stock is a type of equity whose holders typically receive dividends ahead of common shareholders. A buyback is when a company uses its own money to repurchase shares it has issued. According to Decrypt, Strategy repurchased 1,938,780 shares of STRC, its variable-rate Stretch preferred stock. The $193.1 million came from "USD Cash," a name Strategy uses for funds set aside for general purposes, including buying bitcoin.

Decrypt also reports that Strategy's board raised the total authorization of its "Digital Credit Securities Repurchase Program" from $2 billion to $3 billion, with $1.16 billion remaining as of Oct. 18. The program is dedicated to repurchasing the company's preferred stock. A separate program for repurchasing MSTR common stock still has $1 billion available.

Decrypt notes that Strategy also drew $45.5 million from its "USD Reserve" to pay dividends. This reserve is meant to cover preferred dividends and interest on debt.

Comparison with the previous week

Uncertainty from MSCI's rules

MSCI is a company that compiles stock indexes, and many funds follow its indexes to decide which stocks to buy. Decrypt reports that Strategy could be removed from widely tracked MSCI equity indexes. On Oct. 15, MSCI finalized a rule under which "non-operating companies" whose balance sheets are dominated by a single asset will no longer qualify for its Global Investable Market Indexes from the close of Nov. 30. MSCI will publish the list of affected companies on Nov. 11.

Decrypt notes that if Strategy is removed, funds tracking these indexes would be forced to sell the related shares. Decrypt also reports that Strategy co-founder Michael Saylor had urged MSCI to drop the rule, which he called "discriminatory."

What this means for general readers

• Announcements like this show that a listed company can use its funds both to hold crypto assets and to adjust its capital structure, for example by repurchasing preferred stock.
• A higher buyback cap gives the company more room to act, but whether it actually executes depends on future announcements.
• Passive funds are funds that buy stocks according to an index's constituents. Index inclusion rules affect their holdings and may indirectly affect assets ordinary people hold through such funds. The Nov. 11 list is worth watching.

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