Strategy Taps Preferred Equity to Sustain Bitcoin Buying, Avoids Common Share Dilution
In a tactical shift, Strategy (MSTR) has opted to raise capital through its perpetual preferred share programs—STRK and STRF—instead of issuing new common stock, as it continues to expand its bitcoin holdings.
The move comes amid a narrowing gap between Strategy’s share price and its modified net asset value (mNAV), reducing the advantage of common stock offerings through the company’s at-the-market (ATM) program. Issuing equity at or near mNAV risks diluting shareholder value without the benefit of a meaningful premium.
To finance its latest acquisition of 1,045 BTC, Strategy allocated proceeds from preferred stock sales: 59.18% from STRK and 40.82% from STRF. Both instruments have posted impressive lifetime returns—35% for STRK and 24% for STRF—bolstering their appeal as fundraising vehicles.
The preferreds have also become more attractive in today’s stable-rate environment. As share prices rise, yields fall—a dynamic similar to fixed income instruments. Despite 10-year U.S. Treasury yields holding near 4.5%, the dividend yields on STRK and STRF have steadily declined, signaling growing demand.
Analyst Jeff Walton notes that Strategy could return to its common stock ATM if the share price regains a sizable premium—specifically exceeding 2x its mNAV—enabling less dilutive issuance. Until then, the preferred share route offers a compelling path to maintain bitcoin accumulation while preserving common shareholder equity.
