Strategy Buybacks Made Up as Much as 25% of STRC Trading

Strategy’s repurchases accounted for 20% to 25% of weekly trading in its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC) during most of September, making the company a significant recurring participant in its own market.

The share slipped to just under 20% during the first week of October. Strategy repurchased about $176.3 million of STRC from Sept. 28 through Oct. 4, including $102.6 million during Sept. 28-30 and $73.7 million from Oct. 1-4.

The company had $547.2 million remaining under its preferred-securities repurchase program as of Oct. 4. Strategy’s board increased the authorization to $2 billion from $1 billion on Sept. 8.

STRC’s typical market depth was about $28 million for a 10-basis-point price move, or 0.1%. Market depth fell to about $6.5 million on the worst 10% of trading days.

The figures raise questions about how much STRC liquidity comes from independent investors. A $50 million STRC position could be sold in less than two trading days if trades were limited to 20% of average daily volume. The comparable estimate was about five days for Strive’s SATA and six to eight weeks for Strategy’s fixed-rate preferred securities.

Liquidity also declined as STRC moved away from its $100 stated amount. It was about four times lower when the price was 1% to 3% from that level and about eight times lower when the deviation exceeded 6%.

During the same Sept. 28-Oct. 4 period, Strategy bought 334 Bitcoin (BTC) for about $28.7 million. Company records separately listed $154.1 million of cash used for STRC repurchases and $13 million used for Bitcoin purchases; those cash figures were reported separately from the $176.3 million repurchase amount.

Strategy has said its objective is for STRC to trade near $99 to $100 and that the preferred stock pays a variable dividend. The repurchase program may be conducted through open-market purchases, block trades, negotiated transactions, tender offers or exchange offers, and may be modified, suspended or terminated.

The company’s stockholders are scheduled to vote Oct. 28 at 10 a.m. ET (2:00 p.m. UTC) on a proposal allowing daily STRC dividends. If the proposal is approved and implemented, subject to the required filings and board declaration, the first daily dividend is scheduled for Nov. 2, payable to holders of record on Nov. 1. TokenPost previously covered the planned daily STRC dividend vote.