Strategy got STRC to a $99.99 close Thursday, one cent shy of par. Then Binance got hacked, bitcoin sold off, and STRC was back at $99.00 at 11:20 a.m. Eastern Friday. Poor Michael Saylor. Getting this thing to $100 has been expensive. Through October 25, Strategy had spent about $2.04 billion repurchasing $2.10 billion of STRC stated value. That is roughly one-fifth of the shares outstanding before the buyback program began. The scale of the commitment is impressive, even if Thursday’s near-par close proved short-lived.
I increasingly see this as a long game to build a product institutional investors can own in size. A three-year record of reliable payments, liquidity and disciplined capital management would make STRC a much easier conversation for an institutional allocator. Three years isn’t a magic eligibility switch, but surviving enough ugly markets matters. Strategy reports $5.07 billion in dollar assets as of October 25, which it estimates covers 3.4 years of dividends and interest. STRC also moves to daily dividend accrual starting November 1, with payments beginning November 2. They are spending money and refining the product to make it useful well beyond the next bitcoin rally.
Last week, I mentioned Strategy’s head of investor relations, Chaitanya “CJ” Jain, discussing institutional demand on Chase Palmieri’s RE:Bitcoin podcast. The feedback was that further dividend-rate increases could do little for demand and even suggest distress. CEO Phong Le reinforced the point on Thursday’s earnings call: management sees little material demand benefit from another increase and wants to avoid adding dividend obligations for common shareholders. Buying shares below par also retires the dividends attached to those shares. I can see why management prefers that to bidding the rate ever higher.
The cost still lands somewhere. Strategy says it has sold $431.8 million of bitcoin this year to help fund preferred dividends and STRC buybacks. Common shareholders are financing the effort to establish this market. I respect the commitment, and I’m watching whether it produces a durable institutional buyer base. The interesting test is what happens when STRC has to hold $100 with less help from Strategy’s own checkbook.