Strategy Leverages Preferred Stock to Fund Bitcoin Purchases Without Diluting Common Shares

Strategy (MSTR) has shifted away from issuing common equity in recent weeks, instead relying on its preferred stock offerings—STRK and STRF—to finance continued bitcoin (BTC) accumulation.

The decision reflects a strategic move to avoid shareholder dilution as the premium between Strategy’s market capitalization and the value of its bitcoin holdings—commonly known as modified net asset value (mNAV)—has tightened. When shares trade near their mNAV, issuing new common stock becomes less beneficial, particularly without a sizable premium.

To fund its latest 1,045 BTC purchase, Strategy tapped its preferred stock ATMs: approximately 59% of the capital came from STRK, with the remaining 41% sourced from STRF. Both instruments have delivered robust returns to date, with STRK up 35% and STRF gaining 24%, making them compelling funding tools with strong investor demand.

Analysts say declining yields on the preferred shares—due to rising prices and stable U.S. Treasury rates—are enhancing their appeal. As Jeff Walton notes, the preferreds behave like bonds: when demand drives up the share price, yields fall, providing an attractive fixed-income-like profile in a steady-rate environment.

Should Strategy’s common stock regain a sizable premium—especially if it exceeds 2x its mNAV—the company may resume common share issuance via its ATM facility. For now, however, the preferred route offers a lower-impact way to continue BTC purchases while preserving shareholder value.