Strategy asks only common shareholders to approve daily dividends on its STRC preferred

The proposal needs a majority of the voting power of all outstanding common stock ^[2]. The preliminary proxy puts STRC, STRF, STRK and STRD under "Not Entitled to Vote" ^[1]. When STRC moved to twice-monthly payments in May, Strategy let holders of STRC as of April 17 vote on the change ^[16]. Neither Cryptopolitan nor Bankless reports why the second change to the same security is being handled differently.

Strategy's board signed off on September 24 ^[15]. Every calendar day, weekends and holidays included, would become a record date, with declared dividends paid the next business day ^[3]. According to Bankless, STRC goes from twice-monthly to daily and the other three from quarterly to daily ^[9]. That takes STRC from 24 record dates a year to 365, and STRF, STRK and STRD from 4 to 365 ^[17]. On a twice-monthly calendar, the holder on each record date collects roughly half a month of dividends in one payment ^[9]. On a daily one, no date pays more than any other ^[3].

"The proposed changes aim to support price stability, liquidity, and demand," Michael Saylor, Strategy's co-founder and executive chairman, said on X ^[7]. Bankless reports the aim as keeping STRC around a targeted $99 to $100 ^[10]. In a separate statement Strategy argued that steadier preferreds are easier to sell, and that those sales help fund more Bitcoin buying ^[8].

Holding par has cost cash. In early September the buybacks included 1,810,885 STRC shares for $176.3 million, Cryptopolitan reported ^[14]. That is about $97.36 a share, or $2.64 under par ^[18]. The one batch used close to 9% of the enlarged plan ^[19].

Strategy is leaving the rate alone. The plan keeps rates and total regular dividends unchanged ^[5], so the dividend bill does not grow and holders get no extra yield for accepting a new calendar. That leaves two tools for defending par: a buyback that spends cash, and a payment schedule that costs nothing extra in dividends. In the same months that it wants to sell more preferreds ^[8], Strategy has been buying STRC back below par ^[18].

If the vote passes and STRC holds its band after the first daily payment on November 2 ^[4] while buyback spending on it slows, the calendar is holding the price the buyback used to hold. If Strategy keeps buying STRC under par through the first months of daily payments, the schedule change is cosmetic. I expect the second. Each daily payment is a smaller piece of an unchanged annual yield ^[5], and I think demand for a preferred at an unchanged rate depends more on the rate than on how often it is paid. Strategy's case runs the other way: it says buyers will treat a preferred that pays daily as more stable and more like cash ^[10]. If STRC trades at $99 to $100 by year-end with no new STRC buybacks reported, Strategy is right and I am wrong.