The new capital management program of Strategy, announced at the end of June, has indeed been a step forward in reducing liquidity risks. However, as my calculations and data analysis show, key elements of the strategy remain underdeveloped. The company still has not defined a systematic approach to buying and, critically, to selling bitcoin.
Let me remind you that Strategy's plan included five points: forming a dollar reserve exclusively for dividends and interest payments (with a minimum coverage of 12 months), increasing the dividend on STRC preferred shares to 12% per annum, repurchasing preferred and common shares for up to $1 billion for each type, and a bitcoin monetization program with a sales limit of up to $1.25 billion.
The company promptly responded to my recommendations by suspending purchases of the first cryptocurrency. From June 29 to July 5, Strategy sold approximately 3,588 BTC for about $216 million, and then raised $466.7 million through the sale of MSTR shares. As a result, the dollar reserve grew from $1.44 billion to $3 billion, and dividend coverage doubled from 14 to 29 months. The bitcoin reserve remained at 843,775 BTC. However, share repurchases have not yet been conducted.
Despite these positive shifts, two critical issues remain that require immediate resolution.
When to resume bitcoin purchases?
The current share issuance rule at the 1x mNAV mark regulates capital raising but not its deployment. Without a model that accounts for market valuations, the company risks buying again at local peaks. This is a timing problem that cannot be ignored.
How to sell cryptocurrency in the next bull cycle?
The monetization program is purely defensive in nature. It does not provide for partial realization or hedging at cycle peaks. Sales discipline is the second half of active capital management. Without it, Strategy risks missing out on gains in the next rally.
My professional assessment: Strategy has taken an important step, but to complete the turnaround, it needs to implement a systematic model for purchase timing and a clear sales algorithm in a rising market. Until then, this strategy has room for significant improvement.