Key takeaways
- Vaneck’s Matthew Sigel says Strategy’s $135 million sale of Bitcoin in July did not touch its $1.25 billion monetization program.
- Strategy sold 3,588 BTC for approximately $216 million between June 29 and July 5 to fund preferred stock dividends.
- Sigel called Strategy a “hedge fund” trading its own capital stack and Bitcoin, saying it pays a low P/E for it.
On the strategy side, a little
Strategy Inc. (Nasdaq: MSTR) latest bitcoin sales do not count toward company’s previously reported $1.25 billion BTC Monetization program, according to Matthew Sigel, Vaneck’s head of digital asset research. This means that the entire board-authorized sales capacity of $1.25 billion remains available even after the company parted with approximately $135 million in bitcoin last week.
The company initially sold 1,363 BTC at an average price of $59,256, then another $2,225 BTC at an average of $60,773. The profits were used to distribute preferred shares and replenish the company’s US dollar reserve to $2.55 billion.
Sigel has been candid about what this change means about how investors should value the company. Speaking on the Scott Melker podcast on Sunday, the Vaneck executive said:
“You buy a hedge fund that can trade five things: its own capital stack and Bitcoin. What P/E do you pay for such a hedge fund? I pay very low.
Two categories of selling power
THE BTC The monetization program is a capital management framework approved by the strategy’s board of directors that allows but does not require the company to sell. bitcoin to raise up to $1.25 billion for its reserve, preferred dividends and interest payments, or repurchase of its digital credit securities and common stock. Sigel’s point is that last week’s sales were made outside of this program, meaning Strategy retains the entire clearance in dry powder form.
Taken together, the two mechanisms give the company far greater sales flexibility than many shareholders thought it would ever use. For years, Executive Chairman Michael Saylor insisted the company would never sell its business. bitcoina position he formally abandoned this year.
Recent sales reduced Strategy’s holdings by 847,363 BTC at approximately 843,775 BTCstill far ahead of any other corporate treasury. The company faces approximately $1.5 billion in annual dividend obligations on its preferred stock instruments, obligations that its software business alone cannot cover.
Analysts are divided on the new strategy
Not everyone views the formalized sales framework as harmless, given that JPMorgan analysts noted that codifying a bitcoin sales policy introduces “avoidable two-way risk” into crypto markets. Grayscale, on the other hand, argued that the $216 million sale “reduces tail risk” by pre-funding about 17 months of dividends and easing pressure for forced sales during weakness.
According to Sigel, Strategy is no longer a pure leveraged Bitcoin proxy, but an actively managed vehicle that trades its common stock, its four preferred instruments and its Bitcoin stack against each other (a machine that can create value in either direction, but which deserves a lower multiple than that of a growing company). In any case, the next few weeks will be interesting to say the least.
