Michael Saylor shifts to using preferred shares to buy Bitcoin as criticism rises

[NEW YORK] Michael Saylor's Strategy bought US$1.05 billion in Bitcoin in the last seven days, the third consecutive week in which the cryptocurrency treasury company has used preferred shares exclusively instead of common stock to fund purchases.
The company formerly known as MicroStrategy purchased 10,100 Bitcoin from Jun 9 to Jun 15 at an average price of US$104,080, according to a filing on Monday (Jun 16). The haul was the largest by Strategy in five weeks, raising its total holdings to roughly US$63.4 billion.
The emphasis on preferred shares comes as Saylor's cryptocurrency accumulation strategy attracts more attention from critics who have raised concern over the large premium the company's common stock commands over the value of its token holdings. Legendary short-seller Jim Chanos called Saylor a 'salesman' and has recommended buying Bitcoin and shorting Strategy's common shares on a bet the premium will close.
Saylor announced plans earlier this year to raise US$84 billion in capital to buy Bitcoin through a combination of at-the-market common share sales and debt offerings over the next few years. In 2020, Strategy began buying Bitcoin with cash on hand before shifting to stock sales.
The Tysons Corner, Virginia-based firm, which started as an enterprise software maker, has issued three classes of preferred shares, and has also used convertible bonds to buy Bitcoin. Selling more common shares can dilute the holdings of existing shareholders, while preferred stock can also have the same impact if the securities are convertible to common.
'There's definitely the potential for dilution,' said Mark Palmer, an analyst at Benchmark Capital, who has a 'buy' rating on Strategy. 'But the trade-off is that it's only the convertible instruments that enable Strategy to sell volatility into the market. At the same time, there is an understanding that dilution or other instruments that are linked to common shares are part of the strategy.'
The company funded the bulk of its purchases in the past week from the proceeds of the launch of its third class of preferred shares, which raised US$979.7 million. It raised an additional US$78.4 million from the sale of its so-called Strike and Strife preferred shares, according to the filing with the US Securities and Exchange Commission.
Saylor clapped back at comments from Chanos and other critics last week, saying Strategy's ability to raise funds 'at a premium' through the sale of its preferred stock was 'effectively risk-free'.
Strategy shares were little changed at around US$382 on Monday, and are up over 3,000 per cent since July 2020. The S&P 500 Index has climbed around 94 per cent during the same period, while Bitcoin has rallied about 1,060 per cent. BLOOMBERG

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Times

an hour ago

• Business Times

US: Stocks end week mostly lower

[NEW YORK] Wall Street stocks mostly fell on Friday (Jun 20) amid weakness in some semiconductor shares as markets weighed the latest developments in the ongoing war between Iran and Israel. Markets rose after US President Donald Trump's remarks on Thursday on the Middle East, allowing for up to two weeks before possible US military action against Iran. But on Friday afternoon, Trump expressed doubt that European powers would be able to help end the Iran-Israel war, telling reporters, 'Europe is not going to be able to help in this'. The Dow Jones Industrial Average finished up 0.1 per cent at 42,206.82. But the broad-based S&P 500 shed 0.2 per cent to 5,967.84, while the tech-rich Nasdaq Composite Index fell 0.5 per cent to 19,447.41. Analysts pointed to a pullback in some chip companies following a Wall Street Journal report that said the United States could revoke waivers used by some companies to access US technology in China. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Asked about the matter, a Commerce Department spokesperson said that chipmakers will still be able to operate in China. 'The new enforcement mechanisms on chips mirror licensing requirements that apply to other semiconductor companies that export to China and ensure the US has an equal and reciprocal process,' the spokesperson added. Adam Sarhan of 50 Park Investments described the market as on edge in anticipation of new headlines on trade actions or the Middle East. 'We have a situation where tensions in the Middle East missiles are still firing, there's no ceasefire and there's a fear that the US may be involved,' Sarhan said. In light of uncertainty on Iran and other areas, 'investors are de-risking, they are selling stocks ahead of the weekend,' Sarhan said. Fed governor Christopher Waller told CNBC that central banks should 'look through tariff effects on inflation' and focus instead on the underlying trend in price increases. The Fed earlier this week voted to keep interest rates unchanged, as Fed chair Jerome Powell said the central bank could wait to see if Trump's tariffs revive inflation. Among individual companies, Kroger jumped nearly 10 per cent after the supermarket chain raised its sales forecast. However, the company refrained from lifting other projections, saying the macroeconomic environment remains 'uncertain'. CarMax surged 6.6 per cent after reporting a jump in quarterly profits as the company's CEO pointed to a 'very large and fragmented' used car market that 'positions us to continue to drive sales, gain market share and deliver significantly year-over-year earnings growth for years to come'. AFP

Business Times

an hour ago

• Business Times

Europe: Shares edge up as US stalls its Middle East moves

[BENGALURU] European stocks snapped a three-day losing streak and closed higher on Friday (Jun 20), as investors' nerves eased following a stall in US involvement in Middle East tensions. The pan-European Stoxx 600 closed 0.1 per cent higher. As Israel and Iran's air conflict entered its second week, European officials worked to bring Tehran back to diplomatic negotiations as Iranian Foreign Minister Abbas Araqchi arrived in Geneva for talks. The White House signalled US President Donald Trump will decide within two weeks whether to throw US support behind Israel in the ongoing conflict, a move that buoyed market sentiment and reignited some appetite for risk assets, which had been battered earlier in the week amid uncertainty over the conflict's duration. Despite Friday's modest gains, European stocks logged a second consecutive week of losses, as investors continued to fret over the potential global fallout from unrest in the Middle East. 'The uncertainty around the conflict means the risk of energy prices being higher,' said Franziska Palmas, senior Europe economist at Capital Economics. She added that higher energy prices could prompt the European Central Bank 'to keep rates at their current level rather than cutting them further'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up With the Jul 8 US tariff-pause deadline looming, movement on trade deals with Washington has shown little progress, save for a formal agreement reached with London. European Commission President Ursula von der Leyen remains hopeful for a broader deal by Jul 9. Meanwhile, BofA Global Research raised its year-end target for the Stoxx 600 to 530 from 500 on resilience in global growth following a US-China trade deal. Travel and leisure stocks were up nearly 1 per cent, led by a 6.5 per cent gain in Europe's largest travel operator TUI after Barclays upgraded the stock to 'overweight' from 'underweight'. Energy shares lagged 0.6 per cent as oil prices retreated, though the sector was the week's second-biggest gainer due to Middle East tensions that had boosted crude prices earlier. On the day, the insurance sector emerged as the top sectoral gainer, up 1.3 per cent. Among other stocks, London's Berkeley was the biggest percentage decliner, down 8.1 per cent. The homebuilder named current finance chief Richard Stearn as its new CEO, but reported an annual pre-tax profit slightly ahead of market expectations. Stora Enso jumped 14.7 per cent to the top of the Stoxx 600 after the Finnish forestry group announced a strategic review of its Swedish forest assets worth EUR 5.8 billion, including potential separation and public listing. Markets in Sweden and Finland were closed for a public holiday. REUTERS

Straits Times

2 hours ago

• Straits Times

‘Gold', ‘Patriot' or ‘A_A': Special car plates are big business in Malaysia

Compared to conventional bidding by paper, Terengganu-based car plate number agent K.S. Tang says e-bidding brings him more business. PHOTO: COURTESY OF KS TANG – When it comes to getting the car plate of his choice, 45-year-old Au Yong does not take any chances. On June 6, the businessman submitted bids of about RM26,000 (S$7,900) each for the number plates JYC 28 and JYC 26 on the e-bidding platform of Malaysia's Road Transport Department (JPJ). His bid for the latter car plate was nearly nine times the second-highest bid. Join ST's Telegram channel and get the latest breaking news delivered to you.