In a recent development, Microsoft Corporation (NASDAQ: MSFT) disclosed in an SEC filing dated October 24, that a proposal titled “Assessment of Investing in Bitcoin” will be on the agenda at their upcoming shareholder meeting on December 10. This revelation has sparked intense discussions among investors regarding the possible future trajectory of Microsoft’s financial strategy and the chances of the proposal receiving shareholder backing.
Microsoft Bitcoin Investment: Yay Or Nay?
The board of directors at Microsoft has formally advised against approving the Bitcoin investment proposal. In additional documentation submitted to the SEC on October 25, the board of directors explained that the proposed assessment is unnecessary, as Microsoft’s management already incorporates cryptocurrency considerations into their broader investment strategy.
According to the board, “This proposal asks for an assessment that is unnecessary because Microsoft’s management already thoroughly evaluates this topic. Microsoft’s Global Treasury and Investment Services team considers a diverse range of assets to support Microsoft’s ongoing operations, including those expected to offer diversification and protection against inflation.”
The filing further elaborates that past assessments have taken Bitcoin and other cryptocurrencies into account. “Previous evaluations have included Bitcoin and other cryptocurrencies among the options considered, and Microsoft continues to observe trends and developments related to cryptocurrencies to guide future decision-making,” the document states.
The board expressed confidence in Microsoft’s existing methods for managing and diversifying its corporate treasury to benefit shareholders in the long term, considering a public assessment unnecessary. “Microsoft has robust and suitable processes in place to manage and diversify its corporate treasury for the long-term advantage of shareholders, making this requested public assessment unwarranted,” the board declared.
What To Expect
Microsoft’s shareholder base comprises a mix of institutional investors, public companies, and individual investors. As of June 30, 2024, institutional investors held 43.13% of Microsoft’s outstanding shares, while public companies and individual investors accounted for 56.84%. Insiders held a minimal 0.04% of the shares.
The Vanguard Group emerges as Microsoft’s largest shareholder, possessing approximately 9.09% of the total shares outstanding. BlackRock follows with a 7.45% stake, making it the second-largest shareholder, while State Street holds the third-largest position with a 4.04% ownership.
Given this distribution, these major shareholders could play a decisive role in the proposal’s outcome. Vanguard’s anti-Bitcoin stance suggests a likely “no” vote, aligning with the board’s recommendation.
Shareholders’ Stances
In contrast, BlackRock has emerged as a strong advocate for Bitcoin, offering its US clients a spot Bitcoin ETF since January of this year. In their recent earnings call, CEO Larry Fink remarked, “We believe Bitcoin is an asset class in itself.” He further added, “It serves as an alternative to other commodities like gold.”
State Street appears somewhat receptive to Bitcoin. In mid-September, State Street collaborated with Galaxy to launch three new crypto ETFs. Additionally, in August, State Street partnered with Taurus to enhance its crypto services, facilitating the conversion of real-world assets into tradable digital assets.
Industry Predictions
Despite these dynamics, industry analysts largely predict that the proposal to invest in Bitcoin will not secure enough support among Microsoft shareholders. Matthew Sigel, Head of Digital Assets Research at VanEck, summarized the situation: “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 expectations: “Going out on a limb & predicting Microsoft’s largest shareholder (Vanguard) will be voting ‘no’ on adding BTC to the balance sheet…”
Di Lewis, CFO at BTC Inc., also expressed strong skepticism about Microsoft’s potential adoption of Bitcoin, stating 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 commented, “No. This is a fringe proposal by a think tank shareholder and is not a serious consideration by Microsoft at large.”
At the time of writing, Bitcoin traded at $67,608.
