Strive CIO: Bitcoin Treasury Companies Need to Balance Financing and Buybacks

According to TechFlow, on November 10, Strive Chief Investment Officer Ben Werkman said in a post that Bitcoin treasury companies should seek a balance between common share issuance, credit financing, and share buybacks, while also considering the interests of common and preferred shareholders.

Werkman said that when the market capitalization of common shares exceeds the fair value of Bitcoin on the balance sheet, issuing shares and using all proceeds to purchase BTC can increase Bitcoin per share. Using excess cash to repurchase shares can also improve this metric, but it consumes cash reserves.

He believes that issuing credit instruments to purchase BTC can increase Bitcoin per share without issuing additional common shares, but it creates dividend obligations and cost of capital; continuously using preferred share financing to repurchase common shares may weaken the asset coverage of dividends and affect credit quality.

Source: TechFlow