CalPERS Faces Massive Losses from MSTR Investment: The Price of Chasing Bitcoin!

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The esteemed California Public Employees’ Retirement System (CalPERS), the titan of U.S. public pension funds, has taken a rather painful blow. The culprit? A rather bold bet on MicroStrategy (MSTR), whose shares have lately proved to be as temperamental as a stubborn mule.

CalPERS Gets Burned by MSTR

According to the most recent filing with the SEC (because, of course, everything must be official), CalPERS, in its infinite wisdom, decided to acquire a substantial 448,157 shares of MicroStrategy during the third quarter, investing a cool $144 million. Perhaps not the best time for a “long-term” investment?

Fast forward to today, and those same shares have plummeted to a mere $80 million, as if to remind us all that the stock market doesn’t exactly make friends easily. The result? A breathtaking 45% loss, faster than a cheetah on a caffeine binge.

But fear not, for CalPERS isn’t exactly in a financial panic. With over $550 billion in assets and a client base of 2 million public sector workers, this is just a small bump in the road – albeit a very, very bumpy one.

The culprit behind the drop? You guessed it: Bitcoin‘s slump, dragging the tech and crypto-related assets down with it. It’s like a storm that doesn’t just ruin your picnic, but also drowns your hopes of ever finding a dry spot again.

And here’s the thing-while the volatility is enough to make anyone sweat, the real danger for MicroStrategy isn’t just the price swings. Oh no, it’s the looming possibility that MSTR might be kicked off major equity benchmarks, including the MSCI USA Index and the Nasdaq 100. If that happens, we’re looking at a potential disaster for investor demand. A real “back to the drawing board” situation, wouldn’t you agree?

JPMorgan Also Waves Red Flags

Oh, but wait, the plot thickens! JPMorgan has added its own cautionary tale, pointing out that MicroStrategy’s obsession with Bitcoin might just violate the very rules that keep the MSCI and other indices looking somewhat sensible. Apparently, being a Bitcoin hoarder doesn’t exactly qualify you as a “serious” operating business. Who knew?

Now, this is where things get interesting. Passive funds, those lovely, hands-off investment vehicles, track these indices. And guess what? They currently hold a whopping $9 billion in MSTR stock. So, should MicroStrategy be booted off the list, we could see up to $8.8 billion in forced selling. That’s a lot of scrambling and a few sleepless nights for those involved.

MSCI will make its decision by January 15. Mark your calendars, folks. Because if MSTR is shown the door, passive funds will be left to liquidate their positions faster than you can say “bad investment choice.”

MicroStrategy’s growth strategy, it seems, has been to use stock issuance as a way to buy Bitcoin, hoping to ride the digital wave to glory. But here’s the kicker: this strategy has pushed MSTR’s market value far beyond the worth of its actual Bitcoin holdings. It’s like buying a vintage car for $1 million, even though it’s still just a rusty old jalopy underneath.

So, What’s Left to Say?

MSCI, it turns out, sees MSTR as nothing more than a glorified passive fund. But, of course, CEO Michael Saylor strongly disagrees. He insists that the company’s $500 million software business and its active capital-raising efforts should earn them a more flattering classification. A bit of a self-convincing speech, wouldn’t you say?

Investment bank TD Cowen also forecasts that an exclusion from the index could trigger as much as $8 billion in forced selling. That’s a whole lot of “whoops” for a company already in a delicate position.

While MSTR reassures everyone that its assets can cover its debts with a nice 5.9x ratio, even if Bitcoin plummets to $74,000, the market remains unconvinced. The company’s shrinking multiple-to-net-asset-value (mNAV) just isn’t winning any beauty contests these days.

Final Thoughts

  • Yes, MSTR’s 45% stock drop is directly tied to Bitcoin’s rollercoaster and the prevailing risk-off sentiment. Classic.
  • The real danger? Being kicked off the MSCI Index, which could trigger up to $8.8 billion in passive fund selling. Yikes.

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2025-11-29 09:33