OranjeBTC buys back shares after a 25% drop in the month

Source: PortaldoBitcoin Original Title: OranjeBTC repurchases shares after a 25% drop in the month Original Link: OranjeBTC, the largest Bitcoin treasury company in Latin America, announced this Monday (1) that it made a new share buyback, just as it had done at the turn of October to November. With this decision, the company did not purchase Bitcoin in the week between November 24 and 30.

In a statement, OranjeBTC stated that it was structured to make another Bitcoin purchase, which would mark the seventh consecutive week of acquisitions. However, since the company's stock (OBTC3) traded below 1× mNAV on Friday, instead of acquiring Bitcoin, Oranje opted to direct the capital towards share buybacks.

Better than the stock price itself, Bitcoin treasury companies often use the multiple of net asset value (mNAV) as a basis for analysis. This indicator compares the value of the company (EV) to the market value of its Bitcoin holdings, providing investors a way to assess how much of a premium or discount the market assigns to its treasury.

By stating that the shares were trading below 1x mNAV, OranjeBTC points out that the market does not see any premium of the company over BTC.

This week, OranjeBTC continued its long-term strategy of accumulating Bitcoin and increasing Bitcoin per share. We were structured to make another purchase — which would be the seventh consecutive week acquiring BTC. Since OBTC3 traded below 1× mNAV on Friday, we opted for share buybacks, which was the alternative that generated more value for our shareholders.

According to the company, this was the “alternative that generated the most value for our shareholders.” As a result, OranjeBTC sold 29,900 common shares at a price of R$ 11.33 each, in addition to having repurchased 78,500 ON shares at a price of R$ 10.54 each.

The company's Bitcoin reserve remains at 3,720.3 BTC and, with this week's movement, the BTC Yield YTD has risen to 2.23%.

Bad moment?

Share buybacks are a common practice in the financial market where a company repurchases its shares. This reduces the number of shares outstanding, which can increase the value of the remaining shares, improve financial metrics, and signal confidence in the company's value.

On the other hand, this also leads to the market's understanding that the shares may have fallen significantly, which many may view unfavorably, even though, by conducting the buyback, the company wants to show that these shares can be a good buying opportunity with the decline.

The OBTC3 shares have accumulated a decline of about 11% in the last five trading sessions and nearly 25% in the last month.

Fernando Ulrich, advisor at OranjeBTC, explained that downward movements are common and expected, and that the company's business model anticipates this. According to him, without excessive leverage, with calmness and a lean structure – characteristics that OranjeBTC possesses – it is possible to build a long-term strategy without suffering from this short-term volatility.