Saylor’s strategy ramps up sales of preferred in latest Bitcoin purchase

Michael Saylor’s Strategy Inc. bought nearly $1.6 billion worth of Bitcoin—the company’s largest purchase since January—leaning more heavily on a security promising investors an 11.5% annual payout backed by the same cryptocurrency.

The company, formerly known as MicroStrategy, bought 22,337 Bitcoin between March 9 and March 15, according to a regulatory filing Monday. Roughly $400 million of the purchase was funded through sales of common stock. The remaining $1.2 billion came from at-the-market sales of its “Stretch” perpetual preferred shares. The dividend-paying securities—similar to bonds that never mature—promise investors a steady yield funded ultimately by Strategy’s Bitcoin holdings.

Last week marked Strategy’s largest sale of Stretch since the July initial public offering of the issue. It was also the first time in weeks the firm relied mainly on Stretch to fund its purchases. During that period, Strategy has been marketing the securities as a way for investors and corporations to gain exposure to Bitcoin without taking on the cryptocurrency’s trademark volatility.    

Strategy has built a layered funding machine: It issues debt, preferred stock, and equity—all to buy Bitcoin. Each layer promises investors a different mix of risk and reward, but every layer depends on the same thing: the price of Bitcoin going up.  

On Wednesday, Strategy announced an unlikely taker for it...