It’s been an eventful week for the company Twitter since Elon Musk became a shareholder. Indeed, after Elon Musk, founder of SpaceX, took a 9.1% stake in the capital of Twitter, Vanguard Group acquires in turn a 10.3% stake and becomes the main shareholder. This is enough to make the richest man in the world, Elon Musk, blush, dethroned from his first place.
Vanguard Group is an American company of investment funds, as well as one of the biggest competitor of BlackRock. On April 8, 2022, documents made public revealed that the fund held precisely 82.4 million shares of the company Twitter, which corresponds to 10.3% of the capital. Indeed, Vanguard Group had to disclose information to the Securities and Exchanges Commission (SEC). The SEC is the American federal agency in charge of regulating and controlling the financial markets in the United States. It therefore acts as a regulatory authority.
U.S. securities regulations impose a reporting obligation on institutional investors who exceed a holding threshold of 10%. The declaration of exceeding this threshold (on form 13G) must be filed within a (short) period of 10 days. This is why Vanguard, now exceeding 10% ownership since its acquisition, had to communicate the information to the authorities.
The information quickly made the rounds on social networks.
BREAKING: Vanguard Group, one of the worlds largest asset managers has announced they’ve bought a 10.3% stake in Twitter, making them the largest shareholder.— Watcher.Guru (@WatcherGuru) April 14, 2022
What are Vanguard’s ambitions?
At the same time, The Wall Street Journal notes that the fund does not intend to increase its involvement in the company Twitter. According to them, it is not a “directional bet” on Twitter. The fund’s ambitions are therefore not as great as Tesla CEO Elon Musk, who says he wants to turn the Twitter company into a private company, especially to have the tools necessary to guarantee freedom of expression on the platform.
“Instead, the majority of its (Vanguard) assets are in index funds and other so-called passive funds. The company often sides with management on voting issues and does not advocate for change as a hedge fund or activist investor would.”Joseph De Avila and Will Feuer, The Wall Street Journal.
Vanguard did not acquire all of Twitter’s shares in this transaction because the fund already owned 8.4% of Twitter’s stock, according to its February filing. Vanguard therefore acquired an additional 12 million shares to reach the position of Twitter’s largest shareholder (surpassing Elon Musk).
It is a recomposition of Twitter’s board of directors that is currently underway. It will certainly lead to changes in company policy – and may bring some surprises in the future.