Vanguard Is Now the Top Investor in MicroStrategy Stock. Should You Buy MSTR Too?

Yahoo

2 days ago

In a surprising turn of events, Vanguard has emerged as the largest institutional shareholder of MicroStrategy (MSTR), holding 20.5 million shares worth approximately $9.26 billion, representing 8.55% ownership of the company. This development marks a shift for the world's second-largest asset manager, which previously dismissed Bitcoin (BTCUSD) as 'an immature asset class.'
The investment positions Vanguard as the top holder in MicroStrategy, the world's largest publicly listed corporate Bitcoin holder, with 601,550 Bitcoin valued at $74 billion.
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Vanguard has previously criticized Bitcoin, with executives calling the cryptocurrency 'speculative' and warning that it could create portfolio 'havoc.'
While competitors like BlackRock (BLK) and Fidelity launched spot Bitcoin ETFs in January 2024, Vanguard notably abstained from the crypto rush. The firm maintained its stance even as Bitcoin reached an all-time high of $123,000 earlier this month. Additionally, Vanguard CEO Salim Ramji recently reaffirmed that the company doesn't make bets on 'speculative assets,' such as Bitcoin.
This quiet accumulation of MicroStrategy shares suggests Vanguard may be gaining indirect Bitcoin exposure while maintaining its public skepticism toward direct cryptocurrency investments, highlighting the complex dynamics between traditional asset managers and digital assets.
Is MSTR Stock a Good Buy Right Now?
Strategy, formerly known as MicroStrategy, has become the poster child for Bitcoin treasury companies. Over the last five years, MSTR stock has surged more than 3,700%, outpacing the nearly 1,200% returns of Bitcoin.
This remarkable outperformance stems from Strategy's aggressive Bitcoin accumulation strategy, which began in August 2020. Strategy now holds more than 600,000 BTC on its balance sheet, making it the world's largest corporate Bitcoin holder by a wide margin. Executive Chairman Michael Saylor has transformed the software company into what he calls 'the world's first Bitcoin treasury company.'
Strategy's success has sparked a wave of imitators. Even failing businesses are pivoting to Bitcoin treasury strategies, hoping to revitalize their stock prices through exposure to cryptocurrency.
However, this approach carries significant risks. For instance, Strategy employs debt and leverage to acquire Bitcoin, creating what some analysts describe as an ultra-leveraged Bitcoin fund. This approach only works when Bitcoin prices rise, interest rates remain manageable, and market sentiment stays positive.
Is MSTR Stock Overvalued Right Now?
Out of the 13 analysts covering MSTR stock, 11 recommend 'Strong Buy,' one recommends 'Moderate Buy,' and one recommends 'Strong Sell.' The average MSTR stock price target is $543.62, 27% above the current price.
With Bitcoin currently priced near $120,000 acquiring meaningful positions becomes increasingly expensive, which will create a cycle of dilutive stock offerings. While Strategy has delivered exceptional returns, investors should consider whether direct Bitcoin exposure through spot ETFs might offer similar upside with fewer operational risks and complications.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com