Following discussions with Executive Chairman Michael Saylor, Wall Street analysts express increased confidence in Strategy's management plan to stabilise the balance sheet and revitalise capital-raising efforts. The bank anticipates regular management interventions aimed at supporting both preferred and common shareholders, with frequent actions expected to boost cash reserves for STRC.
On Monday, STRC shares were trading at $87.79, while Bitcoin was near $61,800. Strategy's ordinary shares (MSTR) were down 3.4% at $97.34. Shortly after, Strategy announced the sale of $216 million worth of Bitcoin, with the proceeds earmarked for funding STRC dividends.
Cantor asserts that STRC is the cornerstone of Strategy's funding model, dismissing the notion that preferred holders, common shareholders, and Bitcoin investors have conflicting interests. Analysts, led by Ramsey El-Assal, recommend either purchasing STRC to capitalise on the spread to par and substantial yield, or investing in MSTR ordinary shares, which are expected to rally as the capital structure strengthens.
The investment bank expects Strategy to continuously increase cash reserves backing STRC dividends until the preferred shares trade at par. The recent uplift in dividend coverage from approximately 10 to 18 months is seen as a preliminary step in this process. While management could consider additional measures, such as share buybacks, cash reserves are considered the primary instrument.
Cantor also allayed concerns regarding Strategy's upcoming convertible debt maturities. The bank suggests that the company should either reactivate its STRC-driven capital engine before significant repayments are due or refinance the debt. As STRC recovers, MSTR shares are projected to benefit, facilitating further equity issuance to fund additional Bitcoin acquisitions.
In essence, Cantor believes that a successful return of STRC to par will allow Strategy to regain access to lower-cost capital, resume its broader Bitcoin accumulation strategy, and ultimately benefit MSTR shareholders.
