FILE: Michael Saylor gives a MicroStrategy keynote in Barcelona, July 2013. Photo: MicroStrategy / Wikimedia Commons, CC BY 2.0; cropped/resized.
MSCI will remove Strategy from its global equity indexes after a review of companies whose assets and activities more closely resemble investment funds, putting a source of passive demand for the bitcoin treasury company’s shares at risk.
Strategy’s index exclusion is effective December 1, following implementation at the November 30 market close. Tokyo-listed bitcoin holder Metaplanet and British uranium investment company Yellow Cake are also among the companies being removed.
The company, led by executive chairman Michael Saylor, has used debt and equity offerings to build its bitcoin holdings, giving investors another way to gain exposure to the cryptocurrency.
The index decision concerns eligibility for MSCI benchmarks, not Strategy’s stock-exchange listing. It does not require Strategy to sell bitcoin. The immediate pressure is on the shares: funds that track the affected indexes may need to sell stock to match the revised benchmarks.
MSCI had initially considered a screen aimed at companies with digital assets making up at least half their total assets, before broadening its review to non-operating companies with fund-like characteristics.
The amount of any selling remains uncertain. Earlier estimates of potential outflows depended on assumptions about tracking funds and whether other index providers would follow MSCI; they are not confirmed redemptions or an announced sale by Strategy.
MSCI’s November index-review announcement says all changes will be implemented at the November 30 close. Its summary does not name Strategy individually.
JBizNews Desk | New York
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