Software intelligence company MicroStrategy made one of the most bold investment moves of the year when it invested $ 250 million in bitcoin, buying about 0.1 percent of total supply in August. Its CEO, Michael Saylor, has doubled in moving countless public comments and earlier this month, the company raised $ 650 by offering convertible senior notes with plans to buy even more BTC.
But Saylor can’t make these moves alone. The company’s board and investors must also see the value in transitioning to bitcoin. But who are these bullish investors? How did Saylor convince them to choose Plan B? And what does it mean for a cat of Bitcoin enthusiasts in these institutional seats?
Who Do Investors Support Saylor’s Big Play?
Russell Investment is the eight-largest shareholder in MicroStrategy, owning approximately 2 percent of total shares. It has recently increased this position by over 70 per cent, more so than any other shareholder. He has blogged bullishly on BTC since 2018, with quotes like: “While many question the fundamentals of Bitcoin, perhaps even more importantly, Bitcoin questions the foundations of central banks.”
Renaissance Tech (RenTech) is the tenth largest shareholder in the company. It has increased its position fourfold since June, and coincidentally, is when it also received internal approval to begin trading bitcoin futures.
This approval was around the time when MicroStrategy publicly stated that it was considering investing in alternative assets. At this point, we can conclude that RenTech knows that bitcoin is on board and that it is on board the idea.
My personal favorite? Citron Fund. He was publicly bearish on BTC for three years before reversing its position this Fall, saying in an investment memo that MicroStrategy was the best Bitcoin exposure available on the public market today.
Citron bought shares in MicroStrategy and reported a new valuation of $ 700 per share. This is an increase of about 145 percent from the current price of $ 286.
BlackRock has reduced its total position by about 5 percent, but the largest general shareholder remained at 15 percent. They are also the world’s largest asset manager, managing over $ 8 trillion. Its chief investment officer said last month that “Bitcoin is here to stay.”
His CEO went even further, saying that Bitcoin could replace gold.
How Are These Investors Confirmed?
Saylor said it’s a roughly six-month process for approving a move to bitcoin. Six months. To allocate $ 250 million into bitcoin. At least I would have expected 12 months.
Saylor has the majority of voting shares and, at the end of the day, what he says goes. But it is also unlikely that he would push through such a massive policy change without significant support. So how did Saylor convince the board and shareholders to support the move?
First, they were already exposed to it. Russell had been blogging since 2018, RenTech had already documented a recent interest in bitcoin trading. The quick timeline suggests that others are also curious. They do not want to lose the boat and the fact that Bitcoin has survived for 12 years shows that it is not just for you.
Second, education on Bitcoin was central. Saylor has stated that this is part of the process and it shows. MicroStrategy has an entire section of its website dedicated to Bitcoin materials. And that education continues. At last month’s “Investor Analyst Day”, Saylor answered 25 questions during a question-and-answer session. Ten of them focused on Bitcoin.
Finally, there is a lack of other options. Many investment funds have governance charters that do not allow them to invest in cryptocurrencies. For others who can invest, they have expressed concern about custody and security. Basically, all funds are allowed to invest in stocks, but with the Grayscale Bitcoin Trust (GBTC) – the leading trust that provides exposure to the price of bitcoin through a traditional investment vehicle – you pay a premium to the price of bitcoin. MicroStrategy is the best of both worlds.
TL; DR: BlackRock, Russell and RenTech have probably given their blessing in the transition to bitcoin. If MicroStrategy proves to be a success, they could use Saylor’s playbook to advocate for BTC in their other portfolio companies as well.
This is a guest post by Ellie Frost. They are solely their own opinion and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.