Anti-Bitcoin Vanguard Might Be the Largest Institutional Holder of MSTR Stock
Vanguard, the $10 trillion asset manager, finds itself in an ironic situation. Despite publicly opposing Bitcoin and blocking client access to Bitcoin ETFs, it has become the largest institutional shareholder of MicroStrategy (MSTR), a company heavily invested in Bitcoin. Vanguard’s stake, exceeding 20 million shares (over 8% of MSTR), is valued at approximately $9.26 billion. This significant holding stems from Vanguard’s passive index funds, not an active investment decision.
The situation has sparked commentary. Bloomberg analyst Eric Balchunas noted the humor in Vanguard’s predicament, highlighting the nature of index funds which necessitate holding all included stocks regardless of individual opinion. Conversely, VanEck’s Matthew Sigel criticized the move as “institutional dementia,” arguing that passively investing billions in a company whose strategy they publicly oppose lacks strategic coherence.
Vanguard’s passive index funds, including the Total Stock Market Index Fund (VITSX), the Vanguard Extended Market Index Fund (VIEIX), and the Vanguard Growth ETF (VUG), automatically include companies like MicroStrategy when they meet inclusion criteria. MicroStrategy, under Michael Saylor, has amassed over 600,000 BTC since 2020, transforming itself into a Bitcoin-focused entity. Its stock has become a proxy for Bitcoin exposure, particularly before the US approval of spot Bitcoin ETFs.
This unexpected development contrasts sharply with Vanguard’s stance on Bitcoin ETFs. The firm has consistently refused to offer Bitcoin ETF access to clients, even as competitors like BlackRock enjoyed immense success with their iShares Bitcoin Trust (IBIT), reaching over $80 billion in assets rapidly. Even the appointment of Salim Ramji as CEO last year, seemingly more crypto-friendly, hasn’t altered Vanguard’s position. Ramji himself emphasized the importance of maintaining consistency in the firm’s offerings and values. The irony of Vanguard’s substantial, albeit passive, investment in Bitcoin through MSTR highlights the complexities of index fund management and the sometimes unexpected consequences of passive investment strategies.
