Norway has been stacking bitcoin exposure via MicroStrategy

Norwegian sovereign wealth fund, Norges Bank Investment Management, also known as Norway’s Government Pension Fund Global, has been allocating a significant amount of its 18 trillion Krone ($1.7 trillion) to MicroStrategy, Michael Saylor’s leveraged bitcoin holding company.

This is according to the fund’s last reporting. According to the June 30 filings, Norway had invested $217 million in MicroStrategy, giving it 0.89% ownership and 0.45% voting rights. Although significant, its holdings are far subordinate to Saylor’s equity position and 52.9% personal voting power.

As of July 25, 2024, Saylor owned 1,961,668 shares of MicroStrategy class B stock and had sold all of his class A stock. Despite his 52.9% control of voting power thanks to class B voting preference, Saylor owns far less in equity — just 10% of the combined classes.

However, his 10% ownership of MicroStrategy does best Norway’s 0.89% and 0.45% voting rights.

Norges Bank has been buying MicroStrategy equity since 2008. Interestingly, it more than tripled its investment over the last 12 months.

By owning shares of MicroStrategy, Norway’s central bank is gaining leveraged exposure to a bitcoin price proxy. MicroStrategy owns 226,500 bitcoins worth $13.8 billion — roughly half of its $26.3 billion market capitalization.

Because MicroStrategy is able to access long-term debt at favorable interest rates, the price of its shares fluctuates around the price of bitcoin, with variable multiples over time that investors place on MicroStrategy’s underlying bitcoin holdings. Nevertheless, like all leveraged equity plays, Norway’s central bank does have exposure to this bitcoin price proxy.

Read more: MicroStrategy owns almost 2% of all circulating bitcoin — now what?

Norway bought MicroStrategy with oil and gas profits

Norway’s immense oil and gas profits capitalized its sovereign wealth fund, which has ballooned from $23 billion in 1998 to $1.7 trillion today. Norges Bank is as well capitalized as sovereign assets like Saudi Aramco, China Investment Corporation, Abu Dhabi Investment Authority, SAFE Investment Company, or Kuwait Investment Authority.

In order to generate a return on Norway’s governmental assets — historically, 6.3% since 1998 — its central bank-linked fund buys equity in many listed companies which are index constituents. In other words, Norges Bank managers’ decision to invest in MicroStrategy is less endorsement and more reflection of a broad, diversified investment strategy. Indeed, Norges Bank has global exposure across 66 countries, 8,763 companies, 1,488 bonds, and nearly 899 real estate properties.

With so many holdings, MicroStrategy has benefitted from its large size and constituency in several indices. Specifically, it is a constituent of the MSCI All Country World Index, Russell 2000 Index, S&P 600 Small Cap, S&P 600 Information Technology, and the MSCI ACWI IMI Fintech ESG Filtered Index. 

As its market capitalization has increased, MicroStrategy is also striving for future inclusion in major indices like the S&P 500 or Nasdaq 100.

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