The first step in stock trading is to open a stock account. On Tuesday, Eastern Time, Microsoft’s major shareholders voted against including Bitcoin in the company’s balance sheet, believing it does not align with the long-term interests of shareholders. Earlier, the Microsoft board had urged shareholders to reject a proposal from the National Center for Public Policy Research (NCPPR), which suggested that the company invest 1% of its profits in Bitcoin to hedge against inflation.
At the company’s annual meeting on Tuesday, MicroStrategy’s Chairman Michael Saylor delivered a three-minute speech, attempting to persuade Microsoft shareholders to support the proposal. His company has invested billions of dollars in Bitcoin, reaping substantial returns. Saylor claimed: “To achieve excess returns, you need to invest in Bitcoin. If you do, the company’s stock price will also rise significantly.” The NCPPR also played a video at the annual meeting, asserting that Microsoft cannot afford to miss the next technological wave, with Bitcoin being that wave. The video was filled with a series of charts and numbers, illustrating the potential value of holding Bitcoin.
The NCPPR believes that despite Bitcoin’s volatility, it remains an excellent, if not the best, tool for inflation hedging. “Institutional and corporate investment in Bitcoin is becoming increasingly common. BlackRock, Microsoft’s second-largest shareholder, also offers Bitcoin ETFs to its clients.” Data shows that Microsoft’s largest shareholders are institutional investors, including Vanguard and BlackRock.
The shareholder proposal pointed out that Bitcoin is more unstable than corporate bonds, thus suggesting not to hold “too much,” but also not to “completely ignore Bitcoin,” thereby exposing shareholders to the risk of asset devaluation. Therefore, the NCPPR recommended using 1% to 5% of the company’s profits to purchase Bitcoin. The proposal formally asked Microsoft to assess whether diversifying the company’s balance sheet by including Bitcoin aligns with the best long-term interests of shareholders.
Microsoft’s board, which requires stable and predictable investments, clearly expressed its opposition to the proposal in documents submitted to the U.S. Securities and Exchange Commission (SEC). The reason is that Microsoft’s management had previously evaluated this topic but believed that corporate funds require stable and predictable investments to ensure liquidity and operational funds. Most of the investment proposal seems to be based on a “fear of missing out” or “FOMO” mentality.
However, the Microsoft board remained unmoved. Proxy advisory firm Glass Lewis noted that experts believe there is no guarantee that investing in cryptocurrencies will improve portfolio returns. Microsoft’s Deputy General Counsel Keith Dolliver stated during the live webcast of the shareholders’ meeting that the proposal was therefore rejected.
However, with the significant surge in Bitcoin’s value, an increasing number of individuals advocate for investing some corporate assets in the world’s largest cryptocurrency to hedge against inflation. Concurrently, as many company shareholders become more involved in crypto-related businesses, voting against such proposals may become increasingly challenging. To some extent, investment in Bitcoin has also been driven by President-elect Trump, who has promised cryptocurrency-friendly regulations and policies that are leading to Bitcoin’s rebound, with the currency reaching a historical high of $100,000 this month.
According to Eswar Prasad, a professor of trade policy at Cornell University: “Considering the positive outlook for the crypto industry under the Trump administration, it is certainly reasonable for a company to invest a small portion of its reserves in cryptocurrencies, even though such investments are high-risk.” Experience the new and innovative investment research assistant immediately.