Strategy’s STRC Emerges as Top Holding in Major ETFs Despite Price Drop

STRC Emerges as Leading Holding

Strategy’s STRC preferred stock has attained the distinction of being the largest holding in three prominent U.S. preferred stock exchange-traded funds (ETFs), commanding a total of $756 million in investments. This notable achievement comes despite the stock trading approximately 13% below its par value of $100.

Institutional Holdings Surge

Reports indicate that institutional interest in STRC has surged by 105%, while retail ownership has seen a decline from 78% to 71%. Strategy’s co-founder and executive chairman, Michael Saylor, revealed this information on social media, highlighting the growing presence of digital credit products in institutional portfolios.

ETFs with Significant STRC Investments

STRC is presently the top holding in three major ETFs: BlackRock’s iShares Preferred and Income Securities ETF (PFF), Virtus InfraCap’s U.S. Preferred Stock ETF (PFFA), and VanEck’s Preferred Securities ex Financials ETF (PFXF). The combined STRC holdings across these funds have reached $756 million, demonstrating a strong demand for the security.

Market Performance and Price Context

Despite the increasing ETF demand, STRC closed at $86.89 on July 24, gaining 2.29% during trading before rising slightly to $87.14 in after-hours trading. However, this price leaves it still 13.11% below the intended tracking level of $100.

Impact on Strategy’s Bitcoin Purchases

The pricing dynamics of STRC significantly affect Strategy’s funding for Bitcoin acquisitions. The company typically uses the proceeds from selling STRC shares to invest in Bitcoin. The issuance of additional shares near the $100 mark would allow them to raise capital more effectively for Bitcoin purchases. Until STRC prices recover, the company has expressed limited incentive to expand its STRC issuance.

Insights on Trading Strategies

Strategy CEO Phong Le highlighted that the average institutional holding of STRC rose over the past four months, yet some market analysts caution that not all institutional purchases reflect bullish sentiment. Critic Peter Schiff suggested that recent trades could be strategies aimed at profiting from price differentials rather than bets on price increases.

Ongoing Dividend and Recovery Plans

STRC holders currently receive a 12% annual dividend, regulated monthly to maintain stability around its $100 par value. Strategy has indicated that further issuance of STRC and consequent Bitcoin purchases would resume only upon a recovery to the par level.

Binance Listing and Market Presence

Adding to its market presence, STRC was listed on Binance for spot trading, enhancing its accessibility. Despite the expanded distribution channels, the significant discount on the stock remains a barrier to resuming Bitcoin funding.