In a recent SEC filing on Thursday, October 24, Microsoft Corporation (NASDAQ: MSFT) revealed that its “Bitcoin Investment Assessment” will be voted on at its upcoming shareholder meeting on December 10. The development has sparked discussions within the investment community about the potential direction of Microsoft’s treasury strategy and the likelihood of obtaining shareholder approval.
Microsoft Bitcoin Investment: Yes or No?
Microsoft’s board of directors has formally recommended voting against its Bitcoin investment proposal. In the supplementary materials filed in an October 25 interview with the SEC, the board said the requested review was unnecessary, emphasizing that Microsoft’s management already includes cryptocurrency considerations in its broader investment strategy.
The Board emphasizes that “This proposal requires the Board to conduct an assessment that is unnecessary because Microsoft management has already carefully considered this topic. “Microsoft’s Global Treasury and Investment Services team evaluates a wide range of assets in which to invest to fund Microsoft’s ongoing operations, including assets that are designed to provide diversification and inflation protection.”
The filing further noted that previous ratings included Bitcoin among other cryptocurrencies. “Prior assessments have included Bitcoin and other cryptocurrencies among the options under consideration, and Microsoft continues to monitor cryptocurrency trends and developments to inform future decisions,” the document adds.
The board expressed confidence in Microsoft’s existing processes for managing and diversifying its corporate treasury for the long-term benefit of shareholders, deeming a public review unnecessary. “Microsoft has robust and appropriate processes in place to manage and diversify its corporate treasury for the long-term benefit of shareholders, and this required public review is unwarranted.”
What to expect
Microsoft’s shareholder base is a diverse mix of institutional investors, public companies and individual investors. As of June 30, 2024, institutional investors held approximately 43.13% of Microsoft’s outstanding shares, while public companies and individual investors accounted for 56.84%. Insiders owned a paltry 0.04% of the stock.
Vanguard Group is Microsoft’s largest shareholder, owning approximately 9.09% of total outstanding shares. The next largest shareholder is BlackRock with 7.45% of the shares. State Street holds the third largest position with 4.04% of the shares.
Given this division, these major shareholders could play a key role in determining the outcome of the proposal. Vanguard’s position against BTC suggests a likely “no” vote, which is in line with the board’s recommendation.
On the other hand, BlackRock has become a mighty supporter of Bitcoin and has been offering a spot Bitcoin ETF to its US clients since January this year. In his latest earnings call, CEO Larry Fink said, “We believe Bitcoin is an asset class in its own right.” He added: “It is an alternative to other commodities such as gold.”
State Street seems to be somewhat open to Bitcoin. In mid-September, State Street, in cooperation with Galaxy 3, launched recent cryptocurrency ETFs. In August, State Street partnered with Taurus to enhance its crypto services, making it easier to transform real-world assets into tradable digital assets.
Nevertheless, industry analysts largely predict that the Bitcoin investment proposal will not gain enough support among Microsoft shareholders. Matthew Sigel, Director of Digital Assets Research at VanEck, summarized situation on X: “Microsoft shareholders will vote on the Bitcoin investment proposal. MSFT Board advises “No.” No-Coiner Vanguard holds ~9%.”
Similarly, Nate Geraci, president of The ETF Store and co-founder of the ETF Institute, expressed his expectations: “I’m going to be risky and predict that Microsoft’s largest shareholder (Vanguard) will vote no on adding BTC to the balance sheet…”
Di Lewis, CFO at BTC Inc., also expressed mighty skepticism about the likelihood of Microsoft adopting Bitcoin, stating that there is “0% chance that Microsoft will add Bitcoin to its balance sheet this decade.” Adam Cochran, a partner at CEHV, dismissed the proposal as a “sham” idea from a think tank shareholder. He he stated“NO. This is a side proposal from a think tank shareholder that is not seriously considered by Microsoft.”
At the time of publication, the price of BTC was $67,608.
Featured image created with DALL.E, chart from TradingView.com
