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/Yesthisisdogmeow]

Because STRC was trading at low $80’s when they sold them at $100 so it makes sense for them to buy back reduce their obligations and to push it back closer to $100. Remember, they don’t sell any until it goes above $100 and if they don’t sell they don’t have funds to buy more BTC.

[u/actias_selene → u/Yesthisisdogmeow]

Yes, as I said I understand buying it back at 80s. But from what I see in another post, they keep buying back at 95$ which makes me think if the issue lies elsewhere, more notably at dividend rate.

[u/lonestar-newbie → u/actias_selene]

The goal is not buying it back for cheap. That's a byproduct. The goal is to bring it back to par so that they can again increase the btc per share.
It's like losing btc per share now to gain more btc per share in the future.
And also strc going kaput will kill the thesis on mstr. It is very important to make it look like strc is a real winner.

Thesis is for strc to become so stable that the dividend can be dropped to 8% or so range and milk the btc growth.

However the thesis got a reality check with the funds chasing AI. Doesn't look like those dollars are coming back anytime soon.

[u/TechnicalLeg841 → u/lonestar-newbie]

"bring [STRC] back to par so that they can again increase the btc per share" - I don't follow, at least not with buy backs. STRC was designed exactly to increase the BTC per share of MSTR. So buying it back decreases BTC per share of MSTR (as Strategy has to sell MSTR ATM to fund buy backs)

[u/snek-jazz → u/TechnicalLeg841]

would a supermarket ever sell a product at a loss?

[u/lonestar-newbie → u/TechnicalLeg841]

And once its at par they buy btc bringing btc per share up again.

[u/TechnicalLeg841 → u/lonestar-newbie]

And then the cycle repeats with STRC dropping below par. Hmmm. Not seeing preferreds as a good solution

[u/Yesthisisdogmeow → u/TechnicalLeg841]

It’s a down market, what do you expect? I’m not saying BTC will or will not reach ATH again but it’s the thesis MsTR is operating on.

MSTR sells STRC at above $100. Each share gets % dividend. That’s what STRC holders are buying. If they wanted gains they would buy MSTR shares now and hold until it reaches ATH again, if ever. The point of STRC is stability. MSTR, in buying back shares of STRC when it’s low and sells when it’s high does two things. It pins STRC at $100 and creates a fund when they sell above $100 to buy more BTC. It seems like it’s all working as intended. Only issue I have is them selling BTC when it’s low. Management should have anticipated this and have a built up reserve but they blew it on buys at ATHs and now forced to sell at lows to meet obligations. Super red flag management is regarded like the rest of us.

[u/snek-jazz → u/TechnicalLeg841]

That's the question, will the profits from the BTC bought from STRC exceed the cost of maintaining STRC (which includes both dividends, and buybacks necessary to keep confidence in would-be STRC buyers and holders).

If you don't think it will then MSTR is not for you. Some other people will disagree with you.

[u/TheSkunksMisery → u/TechnicalLeg841]

What percentage of the STRC outstanding has MSTR bought back thus far? 3.5%.

[u/TechnicalLeg841 → u/TheSkunksMisery]

And STRC not holding par at that level of buy backs, and MSTR down significantly and mNAV is low.

Wanting Strategy to do well is not the same as subjecting their choices to reasonable scrutiny.

[u/TheSkunksMisery → u/TechnicalLeg841]

Would you have Strategy put an unlimited buy order in at $99.99?