Strategy Inc (NASDAQ:MSTR) rallied along with Bitcoin. The cryptocurrency rally followed a White House meeting with industry executives, while the Treasury Department’s expanded bond-buyback plans lowered long-term yields and weakened the dollar.
However, Strategy Inc (NASDAQ:MSTR) is not a simple leveraged Bitcoin fund. The company held 843,775 Bitcoin on July 26, sold 1,638 Bitcoin during July 27-August 2, and another 1,690 during August 3-9, leaving 840,447 Bitcoin. That position was worth approximately $57.5 billion at Wednesday’s Bitcoin price, but the figure represents gross asset value rather than value attributable to common shareholders.
Bull Case: Capital-Market Access Can Increase Bitcoin Per Share
Common issuance increases gross Bitcoin per share only when the Bitcoin acquired per incremental assumed diluted share exceeds the existing ratio. Issuing above net asset value alone is insufficient because the share denominator and use of proceeds determine the result. Strategy Inc (NASDAQ:MSTR) reported that its company-defined Bitcoin-per-share metric increased 5% during the second quarter to 210,824 satoshis.
Strategy Inc (NASDAQ:MSTR) also had a $4.80 billion reserve as of August 16, including unsettled at-the-market offering proceeds. The reserve provides a buffer for contractual debt interest and preferred dividends when declared, although the preferred series have different terms, including cumulative provisions for certain securities. This liquidity reduces near-term dependence on favorable Bitcoin or capital-market conditions.
Bear Case: Dilution and Senior Claims Complicate the Upside
Strategy Inc (NASDAQ:MSTR) reported $6.7 billion of aggregate convertible principal and a $15.5 billion aggregate preferred notional amount in May. At June 30, preferred equity had a $14.44 billion carrying amount and a $15.46 billion liquidation preference; repurchases began after quarter-end. These claims sit ahead of common equity under a basic-share valuation framework.
Common issuance remains the most visible cost for Strategy Inc (NASDAQ:MSTR) shareholders. The company sold 6.59 million shares for approximately $653 million during August 3-9. It then sold another 3.459 million shares for $333.7 million during August 10-16 while repurchasing $132.2 million of STRC preferred stock. Issuing common shares to strengthen reserves or retire senior securities can improve liquidity while still diluting existing holders.
The financing structure also makes valuation unusually sensitive to methodology. A consistent basic-share bridge for Strategy Inc (NASDAQ:MSTR) would add the Bitcoin reserve, dollar reserve, and other net assets, then subtract convertible principal, preferred liquidation preference, and other net liabilities. The resulting residual value would be divided by basic common shares. Mixing that approach with if-converted shares would double-count portions of the capital structure.
Hedge Fund Sentiment
According to Insider Monkey’s hedge fund database, 32 hedge funds held shares of Strategy Inc (NASDAQ:MSTR) at the end of the first quarter of 2026 from 41 in the preceding quarter. That snapshot predates the recent Bitcoin sales, preferred repurchases, additional common issuance, and Wednesday’s cryptocurrency rally.
Conclusion
Strategy Inc (NASDAQ:MSTR) remains an effective high-beta Bitcoin vehicle, but its common stock cannot be valued from gross Bitcoin holdings alone. Capital issuance is accretive to common holders only after considering Bitcoin per share, dilution, senior claims, financing costs, and the use of proceeds; Strategy’s Bitcoin-per-share metric alone does not capture all of those effects.
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Disclosure: None. This article is originally published at Insider Monkey.
