Strategy Shares Fall 6.46% as MSCI Adopts Screen That Could Exclude It

Strategy shares fell 6.46% to $141.50 at 11:47 a.m. ET (15:47 UTC) Friday, Oct. 16, amid concern that the adopted MSCI screen could affect the company’s place in indexes and demand from passive funds.

MSCI adopted a screen that first assesses whether companies have substantial operating assets, then applies five financial ratios to those that fail the initial test. The approach is aimed at screening out businesses whose asset mix more closely resembles an investment fund than a traditional operating company. The adopted screen assesses operating assets and financial ratios, rather than Bitcoin holdings alone.

If Strategy were removed from MSCI-related indexes, passive funds tracking them could be required to reduce their MSTR holdings. Potential selling pressure could reach billions of dollars. The prospect also puts the company’s equity financing in focus, as Strategy uses it to continue adding Bitcoin to its holdings.

The list of companies expected to be affected is due Nov. 11. The final list is due Nov. 11; MSCI’s adopted methodology will determine any index changes in the November review.