This comment points directly to Strategy Inc.'s new strategy in managing its floating-rate...
This comment points directly to Strategy Inc.'s new strategy (developed based on the MicroStrategy structure) in managing its floating-rate perpetual preferred stock with the ticker $STRC (Perpetual Stretch Preferred Stock).
The Par Value of these preferred stocks was initially set at $100, but following financial and crypto market fluctuations, its market price has dropped below $100 (around $85 to $88). The company's management (led by Phong Le and Michael Saylor) has officially announced that one of their main operational priorities is to restore and stabilize the price of $STRC within its $100 par value range.
🛠 Company Tools to Bring $STRC to $100
The company's management uses several mechanisms and leverage tools to achieve this goal:
Variable Dividend Rate Adjustment:
The company pays the dividend on these stocks periodically (at an annual rate of about 12%). This rate is adjusted floatingly so that its attractive yield encourages buyers toward the stock and drives the market price towards $100.
Opportunistic Buybacks:
Using its liquidity, the company proceeds to buy back $STRC shares at discounted rates from the market. In addition to reducing future payment obligations, this creates buying pressure and pushes the price up toward $100.
Massive USD Reserve:
The company has established a multi-billion dollar cash reserve (around $3.75 billion). This cash reserve guarantees the payment of STRC periodic dividends for over two years, bringing the risk of default or dividend suspension for institutional investors close to zero.
Conditioning New Bitcoin Purchases on $STRC Stability:
The company management has emphasized that resuming large Bitcoin purchases is tied to recovering the $STRC price to the $100 par value level to demonstrate to the market its priority in supporting the credibility of this asset.
💡 Importance of This Approach for the Market
Attracting income-focused institutional investors: $STRC shares have become one of the largest assets available in major global preferred stock ETF funds (such as BlackRock's PFF and VanEck's PFXF).
Creating innovation in crypto financing: Through the $STRC tool, the company tries to create a digital credit instrument with minimal price volatility that offers a fixed and stable income to the market.
The Par Value of these preferred stocks was initially set at $100, but following financial and crypto market fluctuations, its market price has dropped below $100 (around $85 to $88). The company's management (led by Phong Le and Michael Saylor) has officially announced that one of their main operational priorities is to restore and stabilize the price of $STRC within its $100 par value range.
🛠 Company Tools to Bring $STRC to $100
The company's management uses several mechanisms and leverage tools to achieve this goal:
Variable Dividend Rate Adjustment:
The company pays the dividend on these stocks periodically (at an annual rate of about 12%). This rate is adjusted floatingly so that its attractive yield encourages buyers toward the stock and drives the market price towards $100.
Opportunistic Buybacks:
Using its liquidity, the company proceeds to buy back $STRC shares at discounted rates from the market. In addition to reducing future payment obligations, this creates buying pressure and pushes the price up toward $100.
Massive USD Reserve:
The company has established a multi-billion dollar cash reserve (around $3.75 billion). This cash reserve guarantees the payment of STRC periodic dividends for over two years, bringing the risk of default or dividend suspension for institutional investors close to zero.
Conditioning New Bitcoin Purchases on $STRC Stability:
The company management has emphasized that resuming large Bitcoin purchases is tied to recovering the $STRC price to the $100 par value level to demonstrate to the market its priority in supporting the credibility of this asset.
💡 Importance of This Approach for the Market
Attracting income-focused institutional investors: $STRC shares have become one of the largest assets available in major global preferred stock ETF funds (such as BlackRock's PFF and VanEck's PFXF).
Creating innovation in crypto financing: Through the $STRC tool, the company tries to create a digital credit instrument with minimal price volatility that offers a fixed and stable income to the market.
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