Strategy Accumulates $4.8B Cash Reserve as Saylor Downplays Share Buybacks

Strategy is putting its preferred stock operations, cash reserves and credit business ahead of share buybacks, Executive Chairman Michael Saylor said Monday. While the company could repurchase MSTR shares if they become significantly undervalued, Saylor said doing so is not currently a priority.

The comments came during a Monday Q&A following a difficult period for Strategy’s common shareholders. MSTR has fallen about 38% this year and roughly 73% over the past 12 months. The decline has been driven largely by Bitcoin’s weakness and the company’s continued issuance of common shares to finance additional BTC purchases, build cash reserves, pay dividends and repurchase preferred stock.

Saylor said Strategy could consider buybacks if MSTR trades at a substantial discount to its net asset value.

“If MSTR is trading at a very, very deep discount to NAV, then probably you would see us do something like that,” Saylor said.

For now, the company is concentrating on its preferred stock operations, particularly STRC.

Strategy Defends MSTR Share Issuance

CEO Phong Le also defended Strategy’s continued issuance of MSTR shares. Some shareholders have raised concerns that issuing additional stock dilutes their ownership, but Le argued that the strategy can benefit investors when MSTR trades above the value of the assets backing each share.

If Strategy sells shares at a premium and uses the proceeds to acquire Bitcoin, the amount of BTC supporting each MSTR share can increase, according to Le.

The recent decline in STRC has also influenced how Strategy manages its capital.

Le said one of the main lessons from the move was the importance of maintaining enough liquidity to meet STRC dividend obligations. Strategy now has approximately $4.8 billion in U.S. dollar reserves.

Saylor said maintaining a substantial cash cushion gives the company greater flexibility to purchase Bitcoin, repurchase MSTR or preferred shares, and reduce debt when appropriate.

That flexibility also extends to the company’s Bitcoin holdings.

“We have to be able to sell bitcoin as well as buy bitcoin,” Saylor said.

Bitcoin Price Will Influence Strategy’s Capital Allocation

Saylor also explained that Bitcoin’s valuation could influence how Strategy deploys its capital in the future.

When BTC trades substantially above its 200-week average price, the company may choose to retain more of the cash it raises rather than immediately purchasing Bitcoin. Conversely, when Bitcoin approaches or falls below that long-term average, the company could view the level as a more attractive buying opportunity.

Strategy’s approach to STRC differs from its MSTR strategy. STRC is designed primarily to generate dividend income while keeping its share price relatively stable rather than delivering substantial capital appreciation.

Saylor said Strategy aims to keep STRC near the $100 price level. The company could issue additional shares when the preferred stock trades above that level or potentially conduct buybacks if the price falls below it.

He argued that this degree of predictability is an important part of STRC’s appeal.

Saylor Rejects Operating Business Acquisitions

Saylor also ruled out acquiring profitable traditional businesses simply to generate additional cash flow. He argued that adding operating companies would make Strategy more complicated and potentially make the business more difficult for investors to evaluate.

For MSTR shareholders, Saylor recommended maintaining a long-term investment horizon of at least four years, with seven to 10 years being preferable.

Acknowledging the frustration among investors, Saylor said difficult periods are part of the strategy’s long-term approach and that shareholders should be prepared to endure challenging years.

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