- Strategy told preferred shareholders its USD Reserve was a safety net for dividends, then spent most of it on something else.
- The company used $1.38 billion from the reserve to buy back zero-interest bonds that were costing it nothing.
- The cash buffer, built by diluting common shareholders, now covers only six months of preferred dividends instead of over two years.
In December, Strategy CEO Phong Le framed a new $1.44 billion cash buffer as a trust signal for preferred shareholders. He claimed this USD Reserve “currently covers 21 months of dividends” on its preferred stock.
By year’s end, the reserve grew to $2.19 billion through stock sales, covering over 2.5 years of payments. Consequently, preferred investors were told a wall of cash backed their monthly dividends.
However, between May 11 and 25, 2026, Strategy used $1.38 billion from this reserve for a different purpose. The company confirmed it repurchased $1.5 billion principal of its 0% coupon convertible notes.
Those bonds were non-interest-bearing and far from converting into stock. This move directly contradicted the reserve’s stated purpose of supporting dividend and interest payments.
As a result, the USD Reserve has plummeted 63% to $871 million. It now covers just six months of the over $1.7 billion in annual preferred dividend obligations.
CFO Andrew Kang said the company remains committed to a robust cash reserve. The plan is to rebuild it through more sales of MSTR and STRC stock, further diluting shareholders.
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