Company disclosures show that Strategy's preferred stock, STRC, has entered more institutional portfolios and become the largest single holding in three US preferred stock ETFs. However, the security remains significantly below its $100 par value, thus limiting the pace of subsequent financing for Bitcoin purchases.
The three ETFs collectively hold $756 million.
Michael Saylor, co-founder and executive chairman of Strategy, said on July 24 that STRC has become the largest holding of three funds: BlackRock PFF, Virtus InfraCap PFFA, and VanEck PFXF.
According to their disclosed data, the three ETFs collectively hold $756 million in STRC assets. Saylor describes this change as Strategy's "digital credit" products beginning to enter institutional portfolios.
Institutional average positions doubled in four months
The company stated that between March and July, institutional investors' average holdings in STRC rose to $3.5 million, an increase of 105%. During the same period, the proportion of retail investor holdings decreased from 78% to 71%.
However, institutional participation does not necessarily indicate a unanimous bullish sentiment. Peter Schiff believes that some funds may be engaged in spread trading, such as buying STRC while simultaneously shorting Strategy common stock MSTR, or coordinating with short positions in Bitcoin.
Suppressing subsequent share issuance and coin purchases below par value
As of July 24, STRC closed at $86.89, rising to $87.14 in after-hours trading, still about 13% below its $100 face value. For Strategy, this discount directly impacts the efficiency of raising funds by continuing to issue STRC.
The company currently pays STRC holders a 12% annualized cash dividend, distributed twice a month. Management adjusts the dividend yield monthly to push the share price closer to par value and reduce volatility. Strategy CEO Phong Le previously stated that once STRC returns to par value, the company will continue to issue the preferred stock and use the proceeds to increase its Bitcoin holdings.
3,588 bitcoins were sold in July.
According to a company filing dated July 6, Strategy sold 3,588 bitcoins, raising $216 million, which was used to pay dividends on digital credit securities and maintain liquidity. Following the sale, the company held 843,775 bitcoins, and its dollar reserves increased to $2.55 billion.
On the same day, Binance Stocks launched spot trading of STRC. Previously, the market had already introduced perpetual contracts linked to STRC. The new trading channel expanded liquidity, but it has yet to push STRC back to the $100 level that Strategy hopes to use to refinance its investment.
