$MSTR just told us the old playbook is dead
This week's 8-K: Strategy sold 1,638 BTC (~$104M) and raised $291M in common stock. $81M went to buying back STRC; the rest built the USD Reserve to ~$4B — now 27.4 months of preferred dividend coverage.
Three takeaways:
1) STRC is the new engine. Selling stock above 1x mNAV to buy BTC is over. Growth in BTC per share now comes from issuing credit mainly perpetual preferreds and betting BTC's long-term CAGR beats STRC's ~12% cost of capital.
2) Active management, not autopilot. Management admitted putting 99% of capital into BTC while letting the reserve fall to 6 months of dividend coverage was "counterproductive" forcing balance sheet repairs with BTC well off its highs. Expect slower buying above trend, aggressive buying below it.
Watch STRC vs. par into September. Management wants STRC back to par by ~Sept 8 (70 trading days below). An aggressive repurchase program likely means more BTC sales, since the reserve is earmarked for dividends and MSTR at only ~5% above NAV makes equity issuance unattractive.
Net: less mechanical BTC accumulation, more credit-driven, more execution risk. A very different $MSTR than 2024.
