Is a company defined by what it holds, or by how it creates value?
On October 15, the global index provider MSCI announced it would implement new non-operating company screening rules in its global investable market indices. As a result, Strategy (formerly MicroStrategy, MSTR) faces the risk of being removed from certain indices. MSCI plans to publish the final list of affected companies on November 11, with the adjustments taking effect after the close of trading on November 30.
The market first focused on capital inflows and outflows. Previously, analysts estimated that if Strategy were removed, potential passive capital outflows could reach $2.8 billion. But more worth discussing than stock price fluctuations is the underlying debate over corporate definition:
Is a company’s economic essence determined by what assets it holds, or by how it organizes capital, conducts business, and creates value?
A debate that began with Bitcoin—but extends far beyond Bitcoin
This debate did not begin this week.
In September 2025, Japanese company Metaplanet announced a major share issuance, planning to allocate 95% of the proceeds to purchase Bitcoin. Subsequently, MSCI initiated market consultations to discuss whether treasury companies holding digital assets should continue to be included in global stock indices. The initial proposal focused on companies where digital assets accounted for 50% or more of total assets; in January 2026, MSCI suspended implementation of this proposal and shifted to researching broader criteria for identifying non-operational companies. The new rules introduced on October 15 represent a continuation of this approach.
The new rules no longer rely solely on the proportion of digital asset holdings; instead, they first screen for operating assets, then subject companies that fail the initial screening to five financial metrics tests, along with a buffer mechanism. For existing constituents, delisting decisions also consider screening results across two consecutive annual reporting periods. The rules apply not only to Bitcoin treasury companies but also to enterprises such as Yellow Cake plc, which invests in physical uranium.
MSCI's concerns are easy to understand. Stock indices need to maintain relatively clear investment targets: if a listed company's primary activity is merely holding financial assets, investors purchasing its stock may gain only indirect exposure to the underlying assets. If all investment vehicles disguised as companies were allowed into stock indices, the boundary between operating businesses and investment funds would become blurred.
But if a company has established a sustained system of financing, securities design, and capital allocation around an asset, is it still merely an investment tool?
This is precisely the core of the dispute between Strategy and MSCI.
MSCI sees assets, while Strategy emphasizes mechanisms.
From the balance sheet, Strategy’s core assets are heavily concentrated in Bitcoin. Bitcoin itself does not generate operating income, and unrealized gains on holdings are not equivalent to selling products or providing services. Therefore, MSCI has grounds to assess whether it more closely resembles an investment vehicle.
Strategy’s counterargument does not deny the importance of Bitcoin, but rather asserts that a company’s economic activities cannot be reduced to simply holding Bitcoin. It raises capital through instruments such as common stock, convertible bonds, and preferred shares, then allocates that capital to Bitcoin, designing differentiated risk-and-return structures for various investors. In Strategy’s narrative, Bitcoin is not merely an asset held on the balance sheet—it is the foundational element underpinning its capital markets products and financing mechanisms.
They are not focusing on the same thing: MSCI requires a unified, enforceable set of index classification criteria; Strategy, on the other hand, seeks market recognition that its securities design, financing, and capital allocation activities constitute a business model. This is not simply a matter of right or wrong, but rather a potential tension between classification rules and the economic substance of a company.
We tend to believe that asset structure can describe the risks a company undertakes, but it is insufficient on its own to define how it creates value. Conversely, continuous financing and purchasing Bitcoin do not automatically constitute a sustainable competitive advantage. The key remains economic outcomes: Can the strategy secure financing at a reasonable cost? Does the growth in Bitcoin exposure per share cover financing costs and equity dilution? Do differentiated securities products meet genuine, stable investment demand?
These questions are more meaningful than simply labeling the Strategy as a "business entity" or an "investment tool."
Therefore, we believe that replacing an analysis of the business model with an asset allocation alone is insufficient. The percentage of Bitcoin holdings can describe the asset structure of a strategy, but it cannot alone define its business model. MSCI may establish its own index eligibility criteria, but if a classification system fails to adequately capture the true economic activities of companies, it warrants reassessment.
Lessons from Berkshire Hathaway: Capital Allocation Can Also Be a Core Competency
It is not uncommon in business history for a company’s source of value to change. Berkshire Hathaway began as a textile company and gradually transformed into a diversified corporation centered on insurance operations, business ownership, and capital allocation. After acquiring National Indemnity in 1967, insurance and its float became significant sources of capital, allowing Buffett and his team to continuously allocate capital toward businesses and assets with greater long-term return potential.
Berkshire’s story illustrates that a company’s core competitiveness does not necessarily equate to what it originally produced. Sources of funding, organizational structure, and capital allocation capabilities can also be significant sources of long-term value.
From this perspective, the question raised by Strategy is not without precedent. If a company has established ongoing funding channels, differentiated financial products, and capital allocation mechanisms around a core asset, the market has good reason to further investigate: whether its competitive advantage stems from the underlying asset itself, or from its ability to organize capital and convert it into assets.
Berkshire has demonstrated this capability through its long-term operating results, while Strategy is still in the validation process.
The old framework needs to understand the new economy, and the new economy needs to prove itself.
Returning to the controversy surrounding MSCI, index providers have a responsibility to maintain consistent classification and cannot design individual evaluation criteria for every company. However, uniform rules that fail to adequately identify new business models may understate the true economic activities of certain companies.
When a company’s operations are undergoing fundamental change, but its classification system still relies solely on historically established metrics to understand it, that classification may also lose its explanatory power regarding economic reality. The competitive advantages of modern enterprises are increasingly likely to stem from software, networks, financial engineering, data, and capital organization capabilities, rather than just traditional assets such as factories, equipment, and products. For these new types of enterprises, what we need is not to abandon classification, but to develop more explanatory classification methods that can distinguish between different business models.
The strategy is attempting to demonstrate that Bitcoin can serve not only as an asset but also as the foundation for a system of capital organization and allocation. Whether it can truly establish a long-term competitive advantage remains to be tested by the market over time and through economic outcomes. But before reaching a conclusion, we should at least understand what it is trying to build.
Historically, new enterprises often first changed the way value was created, and only later changed how people understood them.
Just as Berkshire Hathaway has transformed, so too have many platform-based companies. What truly deserves investment are not merely companies that cannot be explained by old frameworks, but those that have established new mechanisms for value creation and ultimately proven themselves through economic results.
The old framework needs to understand the new economy, and the new economy equally needs to prove itself.