SEC Filing: Morgan Stanley Bought MicroStrategy Shares After Bitcoin Purchases

Since MicroStrategy bought bitcoin in August, its shares (MSTR) have risen by over 250 percent, according to data from Yahoo Finance. 

The firm has continued to double down on bitcoin ever since its initial purchase in August, purchasing an additional $175 million worth of bitcoin in September and another $50 million in November before launching a $650 million offering of convertible senior notes in December, the proceeds of which it planned to potentially convert to bitcoin.

These moves resulted in Citigroup downgrading MicroStrategy's shares to a "sell" in December. 

Yet a new Securities and Exchange Commission (SEC) filing indicates that investment bank Morgan Stanley is not dissuaded by this. 

Technology analyst Kevin Rooke noted that per an SEC filing, Morgan Stanley revealed that it has 792,627 shares of MicroStrategy (MSTR), which represents 10.9% of circulating shares or around $424 million worth of shares. 

Investors or entities that own more than 10 percent of a single publicly-traded company are required by law to submit reports of their transactions. 

What makes this especially notable is that Morgan Stanley acquired a majority of these shares after MicroStrategy announced its convertible senior note offering.

Morgan Stanley only owned 142,908 shares in the third quarter of 2020, Rooke added. This means that its holdings have grown by 455% on a number of shares basis since the third quarter of 2020. 

The Morgan Stanley arm that acquired these shares is Morgan Stanley Investment Management. 

This branch of the company has over $2.3 trillion under management and is focused on "provid[ing] outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide."

This suggests that these shares were purchased at the direction of Morgan Stanley itself, not the clients that may have wanted exposure to MSTR or Bitcoin.

The Best Way to Own Bitcoin?

Since MicroStrategy announced its intent to purchase bitcoin, the company's shares have rallied from approximately $120 to $530, per data from Yahoo Finance.  Over that same period, Bitcoin has moved from $11,000 to approximately $38,000, per TradingView.com data.

MSTR's correlated nature with Bitcoin has led Citron Research, a leading stock research business, to classify the shares as the "best way to own bitcoin" today. 

Morgan Stanley appears to be taking that to heart as it increases its clients' exposure to Bitcoin via MSTR shares.