- MSCI will remove Strategy, Metaplanet and Yellow Cake from its indexes after classifying them as non-operating companies with fund-like holdings.
- JPMorgan estimates Strategy could face $8.8 billion in outflows if other index providers adopt similar exclusion rules.
- Strategy previously warned that MSCI’s proposed changes could trigger $2.8 billion in stock sales and criticized the criteria as discriminatory.
MSCI will remove Strategy, Metaplanet, and Yellow Cake from its global indexes on December 1. The provider classified the companies as non-operating businesses because their holdings resemble investment funds. Passive sales may follow, and JPMorgan estimates Strategy outflows could reach $8.8 billion if other providers follow.
MSCI Applies Its Non-Operating Companies Rules
Reuters reported that MSCI reached its decision after reviewing companies with fund-like characteristics. Strategy will leave the MSCI USA Index, while Metaplanet will exit the Japan Small Cap Index. UK-based uranium investment company Yellow Cake also faces removal.
The changes take effect after the market closes on November 30. MSCI previously proposed excluding digital asset treasury companies holding investments worth at least 50% of total assets. It later expanded its review to cover non-operating companies.
Ethereum treasury firm SharpLink appeared on MSCI’s watchlist but survived the November small-cap review. Cypherpunk and DeFi Dev Corp. also appeared on the earlier watchlist.
Strategy Faces Billions in Potential Outflows
Strategy previously warned that exclusion could trigger approximately $2.8 billion in stock sales. Its filing showed passive funds tracking MSCI indexes held nearly $3 billion in MSTR shares. That amount represented more than 3% of Strategy’s outstanding stock.
JPMorgan earlier estimated potential outflows could reach $8.8 billion if other index providers followed MSCI. Index-tracking funds generally sell shares removed from their benchmarks and redirect capital toward eligible companies.
However, fund managers may adjust their positions over time rather than sell immediately. Reuters reported that Strategy shares fell 2.5% in after-hours trading following the announcement.
Strategy and Metaplanet Challenge the New Criteria
Strategy, led by Michael Saylor, uses debt and equity issuance to finance Bitcoin purchases. Metaplanet also operates a Bitcoin treasury strategy. Strategy executives Michael Saylor and Phong Le previously criticized MSCI’s proposed changes as discriminatory.
In a September letter, the company argued that excluding digital asset treasury firms would undermine MSCI’s neutrality. Strategy, Metaplanet, and Yellow Cake did not immediately respond to Reuters’ requests for comment.
