- Removing Strategy from affected benchmarks could prompt index-tracking funds to sell its shares.
- JPMorgan previously estimated that Strategy’s exclusion could trigger about $2.8 billion in selling.
- Strategy said MSCI-linked funds held roughly 13 million shares, equal to 3.1% of its basic shares outstanding and less than one day of trading volume.
Strategy Faces Potential Selling Pressure From Benchmark Removal
Strategy could face additional selling pressure if it is removed from the benchmarks affected by MSCI’s proposal. Funds that track those indexes may be required to sell their holdings, reducing a source of passive investment demand for the company’s shares.
JPMorgan previously estimated that Strategy’s exclusion could lead to approximately $2.8 billion in selling. Cointelegraph reported the estimate in October, highlighting the potential market impact of a decision that could affect index-linked ownership of Strategy.
Strategy Challenges MSCI Proposal
Strategy opposed the proposal, arguing that it repackaged MSCI’s earlier effort to exclude digital asset treasury companies from its indexes. The company also said the proposal introduced policy judgments into the process of constructing market benchmarks.
Despite objecting to the proposal, Strategy downplayed the potential disruption from an exclusion. In its consultation response, the company said MSCI-linked funds held approximately 13 million Strategy shares. That position represented 3.1% of Strategy’s basic shares outstanding and amounted to less than one day of trading volume.
Why This Matters
Benchmark membership can influence a company’s shareholder base because passive funds often buy or sell securities to match the indexes they track. Strategy’s potential removal therefore raises the possibility of concentrated selling by index-linked funds, although the company characterized the estimated holdings as limited relative to its overall shares and daily trading activity.
The dispute also reflects a broader question over how index providers should classify digital asset treasury companies. Strategy’s response indicates that the company views the proposal as extending an earlier MSCI initiative while objecting to the inclusion of policy considerations in benchmark construction.
Frequently Asked Questions
What could happen if Strategy is removed from the affected benchmarks?
Funds tracking those benchmarks could sell Strategy shares, reducing passive investment demand.
How much selling did JPMorgan estimate?
JPMorgan previously estimated that Strategy’s exclusion could trigger roughly $2.8 billion in selling.
How large were MSCI-linked funds’ Strategy holdings?
Strategy said MSCI-linked funds held approximately 13 million shares, representing 3.1% of its basic shares outstanding and less than one day of trading volume.
