MSCI to Exclude Strategy From Global Indexes, With Outflows Estimated at Up to $8.8 Billion

Key Facts

MSCI announced on November 11 that it would exclude Strategy and other companies from its global indexes after concluding they were more akin to investment funds than operating companies, Reuters reported. The changes will be implemented at the close on November 30, with the review effective December 1, according to MSCI’s timetable. The decision puts Strategy’s index eligibility in play, potentially affecting funds and investors that track the indexes. Reuters said those entities are required to hold shares of companies listed in the indexes they follow. JPMorgan previously estimated that outflows of up to $8.8 billion could affect the stock if other index providers follow MSCI’s move.

The exclusion decision also covers Tokyo-listed Metaplanet, which buys and holds bitcoin, and British uranium-purchasing company Yellow Cake, Reuters reported. The move is part of a broader review of companies that MSCI considers more like investment funds than operating companies. For Strategy, the step concerns the stock’s index eligibility and the adjustments that could result for entities tracking the indexes. The exclusion does not, in itself, mean the company will sell its bitcoin holdings; the estimates cited concern potential flows in its shares. Those flows remain contingent on decisions by other index providers, according to JPMorgan’s estimate cited by Reuters.

MSCI describes the exclusion mechanism as a screening process that begins by assessing whether a company has substantial operating assets, then moves to five sector-neutral financial ratios if the company fails the initial screen. A security becomes ineligible for inclusion if it fails four or more of the five ratios. For companies already in the index, MSCI said it would remove them only if they failed the screen in each of the two most recent annual reporting periods. The entity may use the latest interim report if available. These criteria link the eligibility decision to an assessment of assets and financial data, while MSCI describes the companies concerned as more akin to investment funds.

Strategy shares fell 2.5% in extended trading on Wednesday following the announcement, Reuters reported. The stock had declined about 20% from the start of the year through November 11, while bitcoin fell 15% over the same period, Reuters reported. The previous year, Strategy warned that its exclusion could trigger the liquidation of $2.8 billion in shares. That warning differs from JPMorgan’s estimate of up to $8.8 billion, as the bank tied the larger figure to the possibility that other index providers would follow MSCI’s decision. These figures concern potential sales by index-linked holders of the stock and do not mean those sales have already occurred.

Looking ahead, MSCI plans to announce the results of its February 2027 periodic index review on February 9, with changes taking effect on March 1, 2027. The November decision concerning Strategy begins to be implemented at the close on November 30, with December 1 recorded as the review’s effective date according to MSCI’s timetable. This timetable allows investors to track the timing of announced index changes. The possibility of larger outflows remains tied to other index providers following the move, according to JPMorgan’s estimate cited by Reuters.