{"id":9111,"date":"2026-06-01T01:59:45","date_gmt":"2026-05-31T22:59:45","guid":{"rendered":"https:\/\/handoli.com\/index.php\/2026\/06\/01\/strategys-usd-reserve-didnt-last-long\/"},"modified":"2026-06-01T01:59:45","modified_gmt":"2026-05-31T22:59:45","slug":"strategys-usd-reserve-didnt-last-long","status":"publish","type":"post","link":"https:\/\/handoli.com\/index.php\/2026\/06\/01\/strategys-usd-reserve-didnt-last-long\/","title":{"rendered":"Strategy\u2019s USD reserve didn\u2019t last long"},"content":{"rendered":"
<\/div>\n

Strategy (formerly MicroStrategy) told preferred shareholders that its so-called USD Reserve was their safety net. Half a year later, it drained most of it to retire zero-coupon debt that was costing the company nothing in interest.<\/p>\n

Indeed, in December, Michael Saylor\u2019s Strategy said it established<\/a>\u00a0a $1.44 billion USD Reserve \u201cto support the payment of dividends on its preferred stock and interest on its outstanding indebtedness.\u201d<\/p>\n

It\u2019s now used most of it\u00a0for purposes other than<\/strong>\u00a0paying interest and dividends.<\/p>\n

USD Reserve is a fancy term for cash used by the company to distinguish cash from its bitcoin (BTC) reserve, which it considers more \u201cpristine<\/a>.\u201d<\/p>\n

It also wanted to earmark the cash as a meaningful reserve for a particular obligation, namely, dividend and interest obligations.<\/p>\n

Strategy\u2019s management diluted common shareholders through at-the-market (ATM) sales of MSTR to create the USD Reserve.<\/p>\n

As common shareholders suffered dilution and no commensurate gain in BTC, preferred holders enjoyed a safety net for a few months, thinking the company would actually use its USD Reserve as promised.\u00a0<\/p>\n

At inception, President and CEO Phong Le\u00a0framed<\/a>\u00a0the cash buffer as a trust signal, claiming it \u201ccurrently covers 21 months of dividends.\u201d<\/p>\n

By late December, additional ATM sales had pushed the reserve to roughly $2.19 billion, covering more than 2.5 years of dividend payments. <\/p>\n

The pitch to STRC, STRK, STRF, and STRD investors was straightforward. Your monthly dividends are safe. A wall of cash stands in support of your dividends<\/strong>.<\/p>\n

USD reserve built for dividends, spent on something else<\/h2>\n

Fast-forward to May 2026, and instead of keeping that USD in reserve for dividends and interest payments, $1.38 billion disappeared within two weeks for something else. <\/p>\n

Specifically, between May 11 and May 25, 2026, Strategy repurchased $1.5 billion in aggregate principal of its non-interest-bearing,\u00a00% coupon\u00a0<\/strong>Convertible Senior Notes due 2029.<\/p>\n

Because the bonds were trading at a discount to par, Strategy paid $120 million less than the $1.5 billion principal.<\/p>\n

Those convertible bonds were generating $0 ongoing interest expense for the company and were nowhere close to converting into MSTR.<\/p>\n

Indeed, Strategy issued the original $3 billion tranche in November 2024 at a conversion price of $672.40 per share of MSTR. MSTR has not traded anywhere near that level in months.<\/p>\n

The company\u00a0confirmed<\/a>\u00a0that the USD Reserve was the funding source for retiring these bonds.\u00a0<\/p>\n

As a result of this action that did nothing \u201cto support the payment of dividends on its preferred stock and interest on its outstanding indebtedness,\u201d despite the company\u2019s December 1\u00a0promise<\/a>, the company\u2019s USD Reserve has declined 63% from\u00a0$2.188 billion<\/a>\u00a0at the start of the year to\u00a0$871 million<\/a>\u00a0today.<\/p>\n

\n
\n

Strategy CEO bought $19K of STRC for his kids after making $37M<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

Read more: Strategy\u2019s BTC binge has cost it $1 billion in expenses<\/a><\/em><\/p>\n

Replenishing USD by diluting Strategy shareholders, again<\/h2>\n

CFO Andrew Kang called the 0% bond buyback \u201cboth equity and credit positive for our investors and demonstrates our continued focus on liability management.\u201d<\/p>\n

The numbers tell a less flattering story.<\/p>\n

Obligations across Strategy\u2019s four series of dividend-paying preferreds now exceed\u00a0$1.7 billion<\/a>\u00a0annually. At the start of 2026, Strategy\u2019s USD Reserve could cover more than 2.5 years worth of dividends. Today, it can cover six months.<\/p>\n

Kang also\u00a0said<\/a>\u00a0the company \u201cremains committed to maintaining a robust cash reserve to support the credit quality of our Digital Credit securities.\u201d The plan is to rebuild the buffer through more sales of MSTR common stock and STRC preferred.<\/p>\n

The same dilution mechanism that built the cash buffer will now refill it.\u00a0<\/p>\n

MSTR closed Wednesday at $154.20, down 58% over the trailing 12 months. These are the shareholders alongside STRC investors who will have to stomach even more dilution soon.<\/p>\n

Got a tip? Send us an email securely via\u00a0<\/em>Protos Leaks<\/em><\/a>. For more informed news and investigations, follow us on\u00a0X<\/a>,\u00a0<\/em>Bluesky<\/em><\/a>, and\u00a0<\/em>Google News<\/em><\/a>, or subscribe to our\u00a0<\/em>YouTube<\/em><\/a>\u00a0channel.<\/em><\/p>\n

The post Strategy\u2019s USD reserve didn\u2019t last long<\/a> appeared first on Protos<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Strategy (formerly MicroStrategy) told preferred shareholders that its so-called USD Reserve was their safety net. Half a year later, it drained most of it to retire zero-coupon debt that was costing the company nothing in interest. Indeed, in December, Michael Saylor\u2019s Strategy said it established\u00a0a $1.44 billion USD Reserve \u201cto support the payment of dividends […]<\/p>\n","protected":false},"author":1,"featured_media":9112,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[147],"tags":[],"class_list":["post-9111","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-invest"],"_links":{"self":[{"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/posts\/9111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/comments?post=9111"}],"version-history":[{"count":0,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/posts\/9111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/media\/9112"}],"wp:attachment":[{"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/media?parent=9111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/categories?post=9111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/handoli.com\/index.php\/wp-json\/wp\/v2\/tags?post=9111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}