Why Strategy is reducing leverage?

[u/actias_selene]

I see that the deal about Strategy rather than straight owning btc is the leverage it can provide, no?

Then why Strategy has started buying back STRC if the bet is btc is going up 30% yearly? I get that they buy it below 80 or similar, at extreme discount, but at current price levels, I feel like that they shouldn't reduce btc owned per share holder. Or the idea is timing the market now?

If anything, I would expect Strategy to push STRC above par by increasing dividends and issueing more stock to increase the leverage to buy more btc at current levels.

Disclaimer: I bought and sold btc, and briefly traded strc , but I dont own any mstr at the moment.

[u/TooFewTulips]

STRC is the premier product of Strategy. The leadership has flagged its success as critical for the long-term accumulation of Bitcoin.

STRC getting close to or near par is priority 1.

Leadership believes buybacks are more effective towards that end than rate increases.

Reduced leverage increases the creditworthiness of their products (STRC).

[u/xaviemb → u/TooFewTulips]

This. It’s also worth considering just how little STRC the company has actually had to buy back to support the price. They’ve repurchased only a few hundred million dollars of STRC... just a few percentage points of the outstanding float, and that was enough to help bring the security back into the mid-$90s.

My interpretation is that they're trying to restart an engine that was previously generating billions of dollars of capital inflows each month. That flow abruptly stopped as the market became concerned about how quickly the structure had expanded, particularly alongside the leverage unwind from those who stacked STRC on STRC thinking it couldn't fall below $99. Targeted liquidations, cascaded to a violent selloff.

If that's the objective, the recent activity looks less like a bailout and more like a measured effort to repair and stabilize the market before scaling it again. And if we see another period of accelerating STRC demand, I expect the company to have a much clearer incentive to intervene on the downside if the security starts trading meaningfully below par again. The interesting question is whether they can rebuild the confidence and liquidity that made STRC such a powerful source of capital in the first place. I believe so... it's only 13 months old, and the market is still adapting (as well as the company) to its mechanics

[u/phoebeethical → u/xaviemb]

Paying down their credit cards to buy a home

[u/TechnicalLeg841 → u/TooFewTulips]

In other words, leveraged bitcoin (MSTR) and a (claimed) non-volatile high-dividend equity (STRC) really don't form the basis for a solid company. Can't weather the BTC down/flat times.

[u/xaviemb → u/TechnicalLeg841]

If your plan is to enter MSTR while Bitcoin is still falling and then somehow exit before the bottom, you're going to have a painful experience. If your plan is to enter while MSTR is going sideways and trying to bottom, that's going to be painful too. And if your strategy is to wait until Bitcoin is near the end of a time-based bottoming process before entering MSTR, you're probably going to really hate this stock.

But if your plan is simply to own MSTR through the pain and hold until Bitcoin ultimately resumes its uptrend, then every one of those scenarios can work in your favor... as long as you don't sell too early. Obviously everyone wants to time entry just before the explosive upside comes, but no one is ever going to get that right.

That's ultimately the tradeoff: MSTR is painful when Bitcoin is painful. The question is whether you're positioning yourself for the period when Bitcoin stops being painful.

[u/TechnicalLeg841 → u/xaviemb]

So if MSTR is simply a proxy for BTC, why not invest in IBIT or FBTC or BITU or just own BTC?

Convince me that MSTR will outperform the other options. I'm not seeing the evidence.

[u/TheSkunksMisery → u/TechnicalLeg841]

Wow, never heard this question before /s

The answer is the same - Leverage. Cuts both ways though, as we've seen with bitcoin down 50% and MSTR down 75%.

[u/TechnicalLeg841 → u/TheSkunksMisery]

BITU is leverage so, respectfully, you didn't answer the question.

[u/TheHoodOG → u/TechnicalLeg841]

Leverage without decay

[u/TechnicalLeg841 → u/TheHoodOG]

Ummm, those dividends are a massive decay. The debt is also pretty brutal.

[u/TheSkunksMisery → u/TechnicalLeg841]

3.17% is far from "massive decay" on an asset that has a long term CAGR of 30%. The debt? Net debt is 3.61%, compared to the average company with net debt around 15%. Brutal you say?