STRF or STRK? Comparing Strategy’s Preferred Stock Offerings

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Comparing Strategy’s Preferred Stock Offerings The STRF sale is scheduled to close later on Tuesday, with Strategy raising approximately $711 million in net proceeds. By James Van Straten | Edited by Sheldon Reback Mar 25, 2025, 9:30 a.m. UTC Strategy CEO Michael Saylor at the Digital Asset Summit in New York City on March 20, 2025. (Nikhilesh De) What to know : STRK and STRF are both preferred stocks. STRF offers a fixed 10% cash dividend with no conversion feature, while STRK offers an 8% dividend and a potential conversion to common stock. Strategy is set to raise $711 million through the STRF sale, upsized from its initial $500 million target, with the offering set to close later on Tuesday. Disclaimer: The analyst who wrote this piece owns shares of Strategy (MSTR). Strategy (MSTR), the U.S. company that's made buying bitcoin ( BTC ) a key corporate policy, recently expanded its financial toolkit with the introduction of a second Series A perpetual preferred stock, adding to its growing line of capital market instruments. The company is selling 8.5 million shares of the new offering, called Strife (STRF), at $85 each, giving it a net $711.2 million for bitcoin purchases. That's up from an initial target of $500 million. The sale ends later Tuesday. Strategy's earlier preferred issuance, Strike (STRK) , initially raised $563 million. Story continues Don't miss another story. Subscribe to the Crypto Long & Short Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy . A perpetual preferred stock sits between debt and common equity in the capital structure, typically offering dividends and greater price stability. That makes it appealing to investors seeking lower volatility and more predictable returns. Unlike owners of common stock, holders do not get voting rights. STRF pays a 10% annual dividend on a $100 stated amount, with payments made quarterly in cash. If Strategy misses a dividend, the amount compounds at an additional 1% a year each up to a maximum 18% dividend rate, creating an incentive for timely payments. Strategy may redeem all STRF shares if fewer than 25% of the original issuance remains or under certain tax events, in which case shareholders would receive the liquidation preference plus any unpaid dividends. Additionally, in the event of a “fundamental change,” holders can force the company to repurchase their shares at the stated amount plus any accrued dividends. Lower dividends from STRK In contrast, STRK offers an 8% annual dividend based on its $100 liquidation preference, though the effective yield declines as STRK’s price rises. Unlike STRF, STRK includes a conversion feature, allowing holders to swap their preferred shares into common stock at a 10:1 ratio if the common share price reaches $1,000, offering equity upside. That means the new issue functions even more as a fixed-income security, making it the less volatile of the two. While STRK may appeal to investors looking for a blend of yield and potential capital appreciation, STRF is clearly aimed at those prioritizing income and capital stability. To support these dividend payments, Strategy will rely on a combination of operational cash flow, proceeds from convertible debt offerings and at-the-market (ATM) share sales on the common stock. Strategy also has an open ATM program in place for STRK , recently purchasing 130 BTC, and has about $3.57 billion remaining on its ATM capacity through the common stock , giving it significant flexibility to fund dividend commitments while continuing to pursue its bitcoin accumulation strategy. The company's shares rose more than 10% on Monday, by which point it held 506,137 BTC. Bitcoin MicroStrategy Stocks James Van Straten James Van Straten is a Senior Analyst at CoinDesk, specializing in Bitcoin and its interplay with the macroeconomic environment. Previously, James worked as a Research Analyst at Saidler & Co., a Swiss hedge fund, where he developed expertise in on-chain analytics. His work focuses on monitoring flows to analyze Bitcoin's role within the broader financial system. In addition to his professional endeavors, James serves as an advisor to Coinsilium, a UK publicly traded company, where he provides guidance on their Bitcoin treasury strategy. He also holds investments in Bitcoin, MicroStrategy (MSTR), and Semler Scientific (SMLR). 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