MicroStrategy seeks to build “smart leverage” and plans to turn to fixed income securities to raise funds to buy Bitcoin

MicroStrategy co-founder and chairman Michael Saylor said the company will shift from a leveraged bitcoin proxy program to a more focused fixed-income securities to raise funds to buy cryptocurrencies once the current fundraising program is exhausted. Saylor expressed this preference in an interview when asked how he expects to fund future cryptocurrency purchases. So far, MicroStrategy has used a combination of new equity and convertible bond sales to fund purchases, the latter of which has paid off for shareholders as its stock rises to a price at which it can be redeemed for shares. "We have $7.2 billion in convertible bonds, but $4 billion of them are essentially equity, they trade through strike prices, call prices, they have a delta of about 100%, they look like equity, and we want to go back and build smarter leverage to benefit our common shareholders," Saylor said. He said the company uses regulated exchanges such as Coinbase to buy bitcoin. MicroStrategy shares are up about 500% this year, far outpacing bitcoin's gain of about 150%. Hedge funds have been looking for their fixed-income securities to implement convertible arbitrage strategies - buying bonds and shorting stocks, essentially betting on the volatility of the underlying stocks. This demand has driven MicroStrategy's issuance of $6.2 billion worth of convertible bonds this year. (Bloomberg)