Twitter (NYSE:TWTR) is in full focus today after Tesla (NASDAQ:TSLA) CEO Elon Musk announced an offer to buy the social media platform for $54.20 per share. Oddly enough, shares of TWTR stock closed the day down 1.7%. This is likely because Musk’s offer may not come to fruition.
Currently, Twitter is reportedly weighing a “poison pill” option that may discourage Musk from acquiring the company. A poison pill provision effectively makes an acquisition less attractive by allowing existing shareholders to purchase shares at less than market value. On top of this news, Saudi Prince Alwaleed bin Talal — a large shareholder of the company — voiced his disapproval of the acquisition.
Prior to all this Twitter drama, however, one investment firm with over $6.67 trillion in assets under management (AUM) reported increasing its existing TWTR position. Let’s jump into the details.
Vanguard Buys TWTR Stock
According to an amended 13G filing, Vanguard now owns 82.40 million shares of TWTR stock, which equates to a 10.29% stake. That’s roughly 12 million shares more — or 17% — than when the firm last reported its stake in the company back in early February. Vanguard is now the largest shareholder of TWTR stock, beating out Elon Musk.
The “date of event” on the 13G filing was March 31, meaning Vanguard increased its position sometime in March. Securities regulatory provisions state that any institutional investor who owns more than 10% of a company must file a 13G form “within 10 calendar days reporting the holdings as of the close of the month.” Therefore, the date of event signifies Vanguard’s TWTR holdings as of March 31. In February, Vanguard reported an 8.8% stake, so its most recent purchase pushed it above the 10% threshold.
Vanguard has an average holding period of 38.62 quarters (or nearly 10 years) for the stocks in its portfolio. As a result, investors should expect the firm to keep its shares of Twitter for the long term. However, Vanguard made its purchase before the Musk acquisition offer. Because of that, it will be interesting to see if the firm adjusts its position based on recent news.
Why did Vanguard increase its Twitter stake in the first place? Institutional investors are not required to disclose their reasons behind purchases or sales. Nonetheless, Twitter has experienced major changes this year, such as the departure of former CEO Jack Dorsey. With new CEO Parag Agrawal now on board, it’s likely he will enact different business decisions and goals. Vanguard’s recent purchase may be a stamp of approval for the company’s new leadership.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
