Bitcoin fell to near $64,000 on November 14, down more than 21% over the previous month. The decline pushed Strategy Inc.'s bitcoin holdings further underwater, with the company's 850,364 BTC valued at approximately $54.79 billion against a $64.16 billion acquisition cost, representing an unrealized loss of roughly $9.37 billion.
Michael Saylor, founder and executive chairman of Strategy Inc. (Nasdaq: MSTR), compared the performance of the company's preferred shares, STRC, with bitcoin's price movement. Over the past year, bitcoin fell 29.8% while STRC returned 13.4% when including dividend payments. Over one month, bitcoin declined 17.3% while STRC's price remained essentially flat, with dividends bringing its total return to 1.0%.
STRC, also called Stretch, is a preferred stock with an adjustable dividend rate. The shares closed at $99.91 on November 13 with a 12% variable annualized dividend rate, meaning the dividend amounts to $12 per year per $100 stated amount per share if the rate remains unchanged.
Unlike direct bitcoin ownership, STRC holders have a financial claim on Strategy as a corporation rather than ownership of the cryptocurrency itself. The preferred shares' distributions depend on corporate funding, and their trading price can move independently of bitcoin.
Economist Peter Schiff criticized the model on November 12, questioning whether long-term bitcoin appreciation could sustain the dividend payments, raising concerns about payment sustainability over time.
Strategy continued purchasing bitcoin and repurchasing its own shares during the period. From November 2-8, the company bought 1,036 BTC for $81.9 million and spent $188.3 million repurchasing 1,887,464 STRC shares, financed through common-stock sales. As of November 8, Strategy held a $4.77 billion designated dollar reserve for preferred-stock dividends and debt interest, along with $146.2 million in separate cash. During that week, it used $21.1 million from the reserve to pay preferred-stock dividends.
