In a recent SEC filing dated Thursday, October 24, Microsoft Corporation (NASDAQ: MSFT) disclosed that an “Assessment of Investing in Bitcoin” will be included as a voting item at its upcoming shareholder meeting scheduled for December 10. This announcement has sparked conversations within the investment community regarding the possible trajectory of Microsoft’s treasury strategy and the chances of shareholder approval.
Microsoft Bitcoin Investment: Yay Or Nay?
Microsoft’s board of directors has officially recommended voting against the proposal to invest in Bitcoin. In additional materials submitted to the SEC on October 25, the board indicated that the requested assessment is redundant, stressing that Microsoft’s management already takes cryptocurrencies into account within their broader investment framework.
The board noted that “This proposal requests that the Board conduct an assessment that is unnecessary because Microsoft’s management already carefully considers this topic. Microsoft’s Global Treasury and Investment Services team evaluates a wide range of investable assets to fund Microsoft’s ongoing operations, including assets expected to provide diversification and inflation protection.”
The filing also mentioned that previous evaluations have included Bitcoin among various cryptocurrencies. “Past evaluations have included Bitcoin and other cryptocurrencies among the options considered, and Microsoft continues to monitor trends and developments related to cryptocurrencies to inform future decision making,” the filing states.
The board expressed confidence in Microsoft’s current processes for managing and diversifying its corporate treasury for the long-term advantage of shareholders, labeling the public assessment as unnecessary. “Microsoft has strong and appropriate processes in place to manage and diversify its corporate treasury for the long-term benefit of shareholders and this requested public assessment is unwarranted.”
What To Expect
Microsoft’s shareholder base is a varied mix of institutional investors, public companies, and individual shareholders. As of June 30, 2024, institutional investors owned approximately 43.13% of Microsoft’s outstanding shares, with public companies and individual investors holding 56.84%. Insiders accounted for a minimal 0.04% of the shares.
The Vanguard Group is Microsoft’s largest shareholder, owning around 9.09% of the total shares outstanding. BlackRock follows next with a 7.45% stake, making it the second-largest shareholder. State Street holds the third-largest position with a 4.04% ownership.
Given this distribution, these significant shareholders could play a crucial role in determining the proposal’s outcome. Vanguard’s negative stance on Bitcoin suggests a likely “no” vote, consistent with the board’s recommendation.
On the other hand, BlackRock has become a strong supporter of Bitcoin and has been offering its US clients a spot Bitcoin ETF since January this year. In their most recent earnings call, CEO Larry Fink stated, “We believe Bitcoin is an asset class in itself.” He added, “It is an alternative to other commodities like gold.”
State Street appears to be somewhat receptive to Bitcoin. In mid-September, State Street initiated three new crypto ETFs in collaboration with Galaxy. In August, State Street partnered with Taurus to enhance its crypto services, facilitating the transition of real-world assets into tradable digital assets.
Despite this, industry analysts predominantly anticipate that the proposal to invest in Bitcoin will not receive adequate support from Microsoft shareholders. Matthew Sigel, Head of Digital Assets Research at VanEck, summarized the situation on X: “Microsoft Shareholders to Vote on Proposal to Invest in Bitcoin. MSFT Board Advises ‘Nay’. No-Coiner Vanguard owns ~9%.”
Similarly, Nate Geraci, President of The ETF Store and Co-Founder of the ETF Institute, shared his predictions: “Gonna go out on a limb & predict Microsoft’s largest shareholder (Vanguard) will be voting ‘no’ on adding btc to the balance sheet…”
Di Lewis, CFO at BTC Inc., also offered strong skepticism regarding Microsoft’s potential to adopt Bitcoin, asserting there is “0% chance Microsoft adds bitcoin to their balance sheet this decade.” Adam Cochran, a partner at CEHV, dismissed the proposal as a “fringe” idea from a think tank shareholder. He remarked, “No. This is a fringe proposal by a think tank shareholder, and is not a serious consideration by Microsoft at large.”
At press time, BTC traded at $67,608.
Bitcoin price, 1-day chart | Source: BTCUSDT on TradingView.com
Featured image created with DALL.E, chart from TradingView.com
