Strategy wants 1,460 record dates a year instead of 36

Strategy has asked holders of four preferred series to move their dividends onto a 365-day accrual, weekends and holidays included, with payment landing the next business day. The company says the economics do not change. What changes is the count: across STRC, STRF, STRK and STRD the year currently holds 36 record dates, and the proposal turns that into 1,460.

“The higher the frequency of those adjustments, the lower the volatility.”

— Michael Saylor, on daily accrual

Michael Saylor, executive chairman of Strategy

The mechanics differ by series, and so does the start date:

• STRC accrues across 24 record dates a year, semi-monthly since June, and switches to daily from 1 November, with the first payment on 2 November.
• STRF, STRK and STRD accrue quarterly, four dates each, and switch on 1 January 2027.
• STRK pays 8% on a $100 liquidation preference. STRD pays 10% on $100 and is non-cumulative. STRC carries a variable rate, set at 11% for periods from January.
• Strategy says the economics do not change. The cash leaving the company stays exactly where it was.

A record date does something specific to a quoted price. STRD pays 10% on a $100 stated amount, so on the day before a quarterly record date the share carries $2.50 of accrued dividend, and the morning after it carries none. That is a 2.5-point step in a $100 instrument, four times a year. Under daily accrual the same step is $0.027. STRK at 8% falls from $2.00 to $0.022. The sawtooth shrinks by the same factor the record dates multiply: ninety-one.

Why a company pays for this

A preferred that steps like that is harder to trade between record dates, and Strategy needs these to trade well, because issuing them is how it buys bitcoin. Earlier this month we watched the company buy STRC back at $97.40 against a $100 stated amount. A security sitting below par is a security whose next issue prices worse, Daily accrual attacks the part of that discount that is mechanical rather than credit. Saylor put the trading case plainly: daily frequency makes it easier to get in and get out.

None of this costs anything. Strategy has paid $255m in STRC dividends since June and will pay the same under the new schedule. The company is holding roughly $2bn in cash raised through stock sales and has kept buying, most recently $76m worth of bitcoin. Strategy improves how its funding instrument trades and pays nothing out to do it.

What it does not change

The accrual becomes daily, the payment does not. Cash still lands on the next business day after the record date, so a holder earns every day and gets paid on the old rhythm. And 1,460 record dates a year is work for a transfer agent rather than a press release. President Phong Le calls it the first global security in the world with calendar day accruals and dividends, which is the company's own superlative and nobody else's finding.

Holders vote on 28 October. If it passes, the thing worth watching is not the dividend, which stays the same, but the spread at which Strategy sells the next tranche of preferred. That number will say whether removing $2.50 of sawtooth from a $100 share was worth 1,460 record dates of administration.

Informational material, not investment advice. Holders vote on 28 October, and the accrued-dividend figures are calculated from the published rates and stated amounts, not quoted by the company.