JPMorgan Increased MicroStrategy Stake and Put Options Before Index Removal

JPMorgan boosted its MicroStrategy position by 36% as of the end of September, just weeks before MSCI decided to remove the stock from its index. The bank also raised its put option holdings by 60%, a form of downside protection.

The bank's own analysts had earlier predicted that the index change could trigger around $2.8 billion in forced selling by index funds.

Larger Stake, Bigger Hedge

The figures come from JPMorgan's 13F filing, a quarterly report of holdings required of major US money managers, submitted to regulators and published on Thursday.

MicroStrategy, now named Strategy (MSTR), is the largest corporate holder of Bitcoin (BTC). As of Sept. 30, JPMorgan owned 848,932 of its shares, valued at $131.3 million. That compares with 624,387 shares in the June filing.

The bank held put options on 1,148,500 shares, exceeding its outright stake of 848,932. In June, those options covered 715,700 shares.

The filing does not break down the composition. It aggregates JPMorgan with 17 affiliates, meaning the figures may include client accounts and trading inventory.

Forced Selling Set for Nov. 30

BeInCrypto highlighted the removal risk in October after MSCI decided that companies holding mostly assets rather than operating businesses would no longer qualify. MSCI confirmed the US index removal on Wednesday.

Index funds track their benchmark. When a stock is dropped, they sell regardless of their view on the company.

Strategy responded with a letter to MSCI.

“While not material to $MSTR, the proposal is misguided, flawed, and conflicts with established securities laws and accounting principles.”

Founder and chairman Michael Saylor posted on X.

“MSCI should be a mirror of the market, not an arbiter of it.”

On Thursday, shares fell 6% to about $115. At that price, JPMorgan's September stake would be worth roughly $97.6 million, down from $131.3 million.

Wall Street analysts remain bullish. Twelve of 13 tracked by TipRanks rate the stock a buy, with an average price target of $217.92.

The forced selling is scheduled for Nov. 30. By Nov. 16, other large managers must also disclose their September holdings, revealing whether they bought the stock, hedged against it, or both.