Tom Lee's $4.5 billion ETF ranks Strategy as its largest position

Core Points

Strategy (formerly MicroStrategy) has become the largest position target of GRNY funds. Balchunas data shows its weight at 3.02%. Later, GRNY official data showed that the weight was 2.98%. This allocation ratio remains at around 3%. GRNY provides investors with indirect Bitcoin exposure.

From minimum position to maximum position: Strategy firm's role shifts

During a drastic portfolio correction in August, Strategy firm became the largest position in the Fundstrat Granny Shots U.S. large-cap ETF (code: GRNY). Bloomberg ETF analyst Eric Balchunas pointed out that in a portfolio tracking tool, MSTR (Strategy Company ticker) jumped from GRNY's lowest-ranked position in mid-August to top position on September 3. Its reporting weight increased from 1.22% on August 14 to 2.52% on August 21, 2.69% on August 28, and 3.02% on September 3. This final reading gave Strategy a narrow lead over Robinhood, which accounted for 2.99% of the portfolio in the same snapshot.

Balchunas said the increase occurred before M subsequently rebounded significantly by about 46%. His post did not specify the exact stock price or start and end dates used to calculate the rate of return, so the percentage should be regarded as his measurement rather than an independently defined performance period. This chronological order does not prove that GRNY's purchases caused a market rebound, it only suggests that the fund had increased its exposure to MSTR before its market price showed an upward trend.

The GRNY official website subsequently showed that the data with a weight of 2.98%

3.02% represented the September 3 portfolio snapshot shared by Balchunas. When inquired later, the official position page of GRNY listed the weight of MSTR as 2.98%, and Robinhood as 2.93%. As a result, Strategy remains the fund's largest position, although its reporting weight is slightly lower than earlier data.

[Image caption: MicroStrategy, Robinhood and Deere & Company's portfolio positions breakdown]

A change from 3.02% to 2.98% does not in itself indicate that GRNY sold MSTR shares. Portfolio weights change when stock prices change, investors add or withdraw funds from ETFs, or the value of other positions rises or falls. To confirm a buy or sell operation, data on the corresponding number of shares at comparable reporting dates is needed.

Strategy firm's position in GRNY

• GRNY reported total assets: $4.533 billion
• MSTR official weight (at query time):2.98%
• Indicative valuation (based on reported data): Approximately US$135 million

Estimates are only approximations as total assets, security prices and portfolio weights may change throughout the trading day. It helps demonstrate the size of the position, but cannot be used to determine the exact cost basis of GRNY.

Maximum position is still less than 3%

Calling MSTR the largest position in an ETF may give people the impression that the position is dominant. In fact, GRNY remains highly decentralized: Strategies 'weight of 2.98% is only 5 basis points higher than Robinhood's 2.93%.

The official fund page describes GRNY as an actively managed large-cap equity ETF, built around the theme of Fundstrat. The strategy looks for companies affected by themes such as millennials, cybersecurity, energy, automation and changes in monetary policy.

Strategy fits this framework because its large Bitcoin reserves make it highly sensitive to the adoption of digital assets and monetary conditions. The company still has a software business, but its balance sheet and financing decisions have made the stock appear in part as a leveraged corporate route to Bitcoin exposure. This exposure continues to change as Strategy firms raise capital and acquire more BTC. See our report on strategy firm Bitcoin accumulation for more information on its latest purchasing activity and financing structure.

GRNY shareholders do not directly own Bitcoin

Buying GRNY is not the same as buying Bitcoin or a spot Bitcoin ETF. The fund holds shares in Strategy, which in addition to its software business also holds bitcoin, cash, debt and preferred stock obligations.

• What GRNY investors own: Shares in a diversified equity ETF that allocates a small portion of its portfolio to MSTR.
• What investors cannot claim: The right to own Strategy's Bitcoin, or the right to exchange GRNY shares for BTC.

This additional corporate level changes the risk profile. MSTR may perform better than Bitcoin when investors reward its financing model; but it may also perform worse than Bitcoin when its valuation premium contracts or financing concerns outweigh BTC fluctuations. GRNY adds another layer of complexity because MSTR only accounts for about 3% of the fund. Huge fluctuations in strategy companies can affect ETFs, but will not determine their full return.

Tom Lee leads GRNY, but does not manage it alone

The primary connection with Tom Lee should also be accurately understood. Lee is Fundstrat's chief investment officer and GRNY's managing fund manager, but an SEC filing states that Lee and Ken Xuan are jointly responsible for the day-to-day management of the fund.

Balchunas also mentioned the connection between GRNY and Ether. The connection stems from Lee's separate role as chairman of BitMine Immersion Technologies, an Ethereum treasury company. This does not mean that GRNY holds ETH, nor does it mean that MSTR provides exposure to BitMine's ether reserves. Lee has separately discussed BitMine's possible sale of ETH, as detailed in our analysis of BitMine's treasury strategy. This role provides context for his involvement in multiple cryptocurrency-related listed companies, but should not be seen as part of GRNY MSTR positions.

The next position update will show whether MSTR remains No. 1

The current question is no longer whether GRNY has increased exposure to strategy companies; August's weighting history has confirmed this. It is unclear whether management intends to keep MSTR at the forefront of the portfolio after the reported rebound.

Future position disclosures are a more reliable answer to this question than mere weighting. A stable or increased shareholding would indicate that GRNY has maintained its exposure, while a lower weighting, if not accompanied by a decrease in shares, could simply reflect strong performance from other parts of the fund.

Strategy's move to the top has brought GRNY closer to Bitcoin than in mid-August. However, with its assets accounting for less than 3%, the position remains an integral part of a diversified active equity strategy rather than transforming GRNY into a crypto fund.

This article is for reference only and does not constitute investment advice.