MSCI will announce its final constituent decisions on November 11, and Strategy is one of five companies on its potential-deletion list. Strategy says the exposure is limited, estimating that relevant funds hold about 13 million of its shares.
Strategy faces a November 11 decision from MSCI that could remove the company from the provider's global equity indexes. The company sells new shares to finance Bitcoin purchases, so the outcome puts a source of demand for those shares under scrutiny.
Changes take effect after the November 30 close. Strategy has challenged the eligibility rules and says deletion would have a limited effect.
Strategy disputes MSCI's new screening rules
Strategy has urged MSCI to withdraw the framework. In its published response, the company described the operating and non-operating classifications as having no basis in US GAAP, IFRS or a recognized legal framework.
MSCI's methodology works differently. A company passes the initial screen if operating assets represent at least 50% of total assets. Companies below that threshold face five further financial tests, and an issuer must fail at least four to meet the exclusion condition.
Five securities on the potential-impact list
MSCI's list identifies five potential deletions: Strategy, Metaplanet, Yellow Cake, Skel Fjarfestingafelag and Upexi. Strategy appears with a float-adjusted value of $40.29 billion, roughly 93.6% of the five companies' combined total of approximately $43.05 billion.
However, the document relies on market values dated October 9, which are not current quotations.
What the index funds hold
Strategy puts the relevant index-linked holdings at approximately 13 million MSTR shares, equal to 3.1% of its basic shares outstanding. The company says that amounts to approximately 60% of its 30-day average daily volume.
Removal would not require Strategy to sell its Bitcoin. Still, it could take benchmark-linked buyers out of a stock the company uses to raise fresh money.
Recent filings show the link at work. During October 12-18, Strategy raised approximately $22 million by selling common shares and spent $22.1 million on Bitcoin, lifting its holdings to 848,517 BTC. The following week it reported no Bitcoin purchase and no at-the-market share sale.
Source: crypto.news
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