Saylor’s strategy ramps up sales of preferred in latest Bitcoin purchase

Michael Saylor’s Strategy Inc. bought nearly $1.6 billion worth of Bitcoin—the company’s largest purchase since January—leaning more heavily on a security promising investors an 11.5% annual payout backed by the same cryptocurrency.

The company, formerly known as MicroStrategy, bought 22,337 Bitcoin between March 9 and March 15, according to a regulatory filing Monday. Roughly $400 million of the purchase was funded through sales of common stock. The remaining $1.2 billion came from at-the-market sales of its “Stretch” perpetual preferred shares. The dividend-paying securities—similar to bonds that never mature—promise investors a steady yield funded ultimately by Strategy’s Bitcoin holdings.

Last week marked Strategy’s largest sale of Stretch since the July initial public offering of the issue. It was also the first time in weeks the firm relied mainly on Stretch to fund its purchases. During that period, Strategy has been marketing the securities as a way for investors and corporations to gain exposure to Bitcoin without taking on the cryptocurrency’s trademark volatility.    

Strategy has built a layered funding machine: It issues debt, preferred stock, and equity—all to buy Bitcoin. Each layer promises investors a different mix of risk and reward, but every layer depends on the same thing: the price of Bitcoin going up.  

On Wednesday, Strategy announced an unlikely taker for its perpetual preferred shares: another company whose balance sheet hinges on Bitcoin’s price. Bitcoin treasury company Strive Inc.—co-founded by former Republican presidential candidate Vivek Ramaswamy—announced that it allocated $50 million, or more than one-third of its corporate treasury, to the securities.

Strive, which owns about 13,300 Bitcoin, is already heavily exposed to the token’s price swings. It’s turning to Stretch to earn a double-digit yield on capital set aside to meet its own preferred dividend obligations.

“Instead of holding idle cash earning low yields in money market funds, we believe it makes sense to allocate a portion of those reserves to instruments like Stretch that provide strong yield dynamics while maintaining stable price behavior with deep liquidity,” Matt Cole, chief executive officer of Strive, said at the time.

The firm issues its own preferred shares with a 12.75% dividend and uses most of the proceeds to buy Bitcoin. It keeps cash in reserve to cover the fixed dividends of the preferreds. By putting some of its reserve cash into Stretch, which has an 11.5% yield, instead of treasury bills yielding about 3.7%, Strive increases the income it earns on that cash.

Even so, it still pays out more on its own preferred shares than it earns on reserves – a gap of 1.25%. If Bitcoin rises enough to close the gap, equity holders could benefit. If it doesn’t, the preferred dividends still have to be paid, reducing capital available to common shareholders. 

“We believe it is prudent for a digital credit issuer to be both an issuer and holder of digital credit,” Cole said in an email, adding that Stretch increases the firm’s “balance sheet efficiency while maintaining liquidity and security.”

The investment is the first known case of a digital asset treasury using another DAT’s preferred stock to back its own dividend obligations, said B. Riley Securities analyst Fedor Shabalin, who has a buy rating on Strive’s shares. “The entire DAT growth model depends critically on maintaining an equity premium to net asset value,” he said in a note. “If this premium collapses or flips to a discount, the virtuous cycle breaks down.”

Strive’s investment is a major bet on Bitcoin and Strategy. “They’re putting a lot of risk on the table if Strategy can’t perform,” said RIA Advisors Portfolio Manager Michael Lebowitz. “Any Strive shareholders should be outraged.”     

Stretch’s yield is reset monthly to encourage the security to trade around its $100 par value. But the $100 level isn’t guaranteed — if the company lowers the yield or demand weakens, the market price can fall below par and investors could face losses if they sell. Last month, the securities fell as low as $93.67. The stock rose 14% on Monday.

For Strategy, the preferreds give Saylor a way to keep buying Bitcoin without further punishing the people who already own the common stock, which is down about 50% over the past 12 months. The stability of Stretch may be attractive to investors after a volatile period for Bitcoin in the final months of 2025, including a sharp selloff that hammered crypto-heavy balance sheets. Bitcoin fell for five consecutive months through February. Shares of Strategy rose 5.6% on Monday.

What makes Strategy’s capital experiment extraordinary isn’t any single instrument—it’s that an entire ecosystem of companies have been issuing, buying, and cross-holding securities that all depend on Bitcoin’s price never falling too far for too long. The instruments are designed to attract different appetites for risk, but they all feed from the same funnel.

Bitcoin has remained highly volatile this year. The coin is trading around $74,000 on Monday, up more than 10% since the start of the month. The swings come as global markets face continued pressure tied to the ongoing conflict in Iran. Strategy’s common stock—which is widely considered a Bitcoin proxy and often moves in tandem with the cryptocurrency—is up about 14% this month. The firm holds more than 761,000 Bitcoin worth about $58 billion.

This story was originally featured on Fortune.com