US Commerce Secretary Lutnick’s Former Firm Buys Bitcoin – MSTR & IBIT
Legendary Investor Series
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
— Benjamin Graham
Billionaire US Commerce Secretary Howard Lutnick is a former owner and CEO of the large financial Wall Street firm Cantor Fitzgerald, whose majority ownership he has transferred to his sons.
Cantor Fitzgerald will be an interesting company to monitor as part of the legendary investor series, in particular given the recent significant changes to Cantor Fitzgerald’s investments in light of Howard Lutnick’s appointment as US Commerce Secretary in the Trump administration.
Let’s dive right in.
1. Leadership Shakeup: Cantor Fitzgerald Since Lutnick Took Office
Cantor Fitzgerald is a key player on Wall Street. It is a major, privately held financial services firm founded in 1945 and headquartered in New York City. It operates as an investment bank and brokerage, specializing in institutional equity and fixed-income sales and trading, as well as providing services like corporate finance, mergers and acquisitions (M&A), prime brokerage, and commercial real estate financing.
The firm serves over 5,000 institutional clients globally and has more than 12,000 employees working from around 60 offices worldwide. Significantly, Cantor Fitzgerald is one of about two dozen primary dealers authorized to trade U.S. government securities directly with the Federal Reserve Bank of New York, a key role in the U.S. financial system. This status underscores its importance on Wall Street as a trusted intermediary in government bond markets.
Howard Lutnick was the CEO and majority owner of Cantor Fitzgerald. As part of the divestiture requirements of becoming U.S. Commerce Secretary, he transferred ownership of the company to his sons. Brandon Lutnick was named Chairman, and Kyle Lutnick was named Executive Vice Chairman of Cantor Fitzgerald.
While he has personally divested, given that the company stays within the family, it is interesting to note how significantly the $5 billion investment portfolio of Cantor Fitzgerald changed in Q4 2024 in the run-up to Howard Lutnick assuming his new position as US Commerce Secretary.
Cantor Fitzgerald’s investment changes in Q4 2024, presumably in the aftermath of Trump’s election (November 4, 2024) and Lutnick’s announcement to become the next Commerce Secretary (November 19, 2024), should be of extreme interest to investors.
What potential insights can we, as investors, learn from Cantor Fitzgerald’s investment changes?
2. Cantor Fitzgerald’s Bitcoin Bet: What You Need to Know
The biggest portfolio changes to Cantor Fitzgerald’s investment portfolio were Bitcoin-related. What were the potential drivers for these Bitcoin-related portfolio changes?
While Lutnick, as the US Secretary of Commerce, does not have direct regulatory authority over cryptocurrencies, his role involves overseeing trade policy, international commerce, and agencies related to innovation and technology, which can impact the crypto industry’s environment and adoption. This could be one driver.
Another factor could be the well-known, very supportive attitude toward Bitcoin and cryptocurrencies of the current Trump administration versus the more hostile attitude toward Bitcoin and cryptocurrencies of the prior Biden administration. I don’t mean to make this a political point – for or against either administration – but rather to point out the publicly known, important policy differences.
Yet another driver could be, I speculate, internal conversations during Q4 2024 regarding what the Trump administration plans or does not plan to do, as it relates to Bitcoin and cryptocurrencies.
Whatever the root cause, during Q4 2024, Cantor Fitzgerald took on a major Bitcoin position.
Cantor Fitzgerald’s Portfolio – Top Bitcoin Related Investments (as of December 31, 2024)
Source: Cantor Fitzgerald SEC Form 13F
So, what did Cantor Fitzgerald do?
Let’s start with the smaller investment. Cantor Fitzgerald increased its Bitcoin ETF (IBIT) position by 221.3%, from roughly 500,000 shares to 1,636,754 shares. As of December 31, 2024, that investment is roughly 1.7% of Cantor Fitzgerald’s total portfolio value.
Next, it entered into three different, new MSTR (Strategy) related investments. For those who don’t know, MSTR (Strategy) has become a popular investment tool for Bitcoin investors who are looking for a leveraged Bitcoin investment.
Strategy, formerly called MicroStrategy (MSTR), is a complex company. It started out years ago as a software company and had its challenges. Then it changed its focus and became a true Bitcoin company by using its treasury money to purchase Bitcoin aggressively, and further borrowing more money and issuing more equity to buy more Bitcoin.
I wrote a high-level summary about the company back in November 2024, when it was still called MicroStrategy. You can read about it here: “Turbo-Charged Bitcoin Profits - MicroStrategy (MSTR)”. In the meantime, the funding methods of Strategy have become way more complex, but the basic premise of MSTR has stayed unchanged, which is "Get/borrow money to buy Bitcoin, and profit from the Bitcoin rise."
Bitcoin as well as Strategy (MSTR) have many detractors, and I am not trying to convince anyone for or against it.
However, if you believe in Bitcoin and Strategy (MSTR) as a leveraged Bitcoin play, it is certainly interesting that Cantor Fitzgerald took a major position in Strategy (MSTR) in Q4 2024.
As per the stock exchange NASDAQ (see below table), Cantor Fitzgerald, as of December 31, 2024, is now the 8th largest institutional investor in Strategy (MSTR), up from zero just a quarter earlier. Remarkable.
Strategy (MSTR) Institutional Holdings (formerly MicroStrategy)
Source: https://www.nasdaq.com/market-activity/stocks/mstr/institutional-holdings
Cantor Fitzgerald’s Q4 2024 Strategy (MSTR) Investments
Purchased 3,580,131 MSTR shares worth about $1 billion as of December 31, 2024.
Purchased a protective put for roughly half the shares, probably as a worst-case scenario protection to limit the downside if MSTR loses significant value. There is no other information provided about the put options, including the details of the put (expiration date, strike price, etc.).
Purchased a speculative call for about 115,000 shares (a relatively small additional bet should MSTR increase in value). There is no other information provided about the call options, including the details of the call (expiration date, strike price, etc.).
Note: The SEC quarterly 13F report does not specify whether a position is long (purchased put and/or call) or short (sold put and/or call). However, according to reporting guidance, only long positions need to be reported. Thus, if you see an option listed on an SEC 13F report, it is a long position (purchased put and/or call). As per SEC guidance, see Question 43 in the following link which says, “You should not report put or call options that you write.” Source: https://www.sec.gov/rules-regulations/staff-guidance/division-investment-management-frequently-asked-questions/frequently-asked-questions-about-form-13f
What can we learn from Cantor Fitzgerald’s investments? Something happened in Q4 2024 that made Cantor Fitzgerald very bullish on MSTR (which is a leveraged Bitcoin bet), to take up such a large position. The MSTR equity investment was Cantor Fitzgerald’s largest investment by far as of December 31, 2024, worth about 20% of their total portfolio of $5 billion. That is a significant bet. They hedged the downside a bit by buying a put for half their equity investments, and took a small additional aggressive position by buying an MSTR call.
Together with the Bitcoin ETF purchase (IBIT) mentioned above, that is a significant bet for this family-owned large Wall Street company that, until very recently, was run and owned by the current Secretary of Commerce Howard Lutnick.
In addition, here is what Howard Lutnick said about his personal investments (time code 1:30):
“I personally have hundreds of millions of dollars, okay, hundreds and hundreds of millions of dollars of exposure to Bitcoin, and it will be billions….”
So, right or wrong, he is clearly extremely optimistic about Bitcoin.
3. Beyond Bitcoin: Cantor Fitzgerald’s Other Big Investments
The other two big investment bets, as of December 31, 2024, are sizeable puts on Tesla and Nvidia. Given the significant decline of both companies as part of the Mag 7 decline, Cantor Fitzgerald did well with both investments.
Cantor Fitzgerald’s Portfolio – Other Significant Investments (as of December 31, 2024)
Source: Cantor Fitzgerald SEC Form 13F
I think that these investments already played out, but it is still interesting to see how they did it. Cantor Fitzgerald owned Nvidia and Tesla investments. At the same time, it owned protective puts on both investments. In fact, the puts on both companies were significantly in excess of the protected equity investments. In the case of Nvidia, it was about 1.6 times the size of the equity investment, and in the case of Tesla, it was about 1.8 times the size of the equity investment.
The way I read it, is that the company not only wanted to protect the downside of its existing equity investments but also wanted to take a speculative position and profit from a decline in both stocks. That is what actually happened in Q1 2025. Good for them!
So, why not just sell off Nvidia and Tesla and buy smaller put option positions instead? Cantor Fitzgerald didn’t say, but I suspect it is a mix of tax optimization (selling would be a taxable event) and maintaining upside potential. If I am long-term bullish but short-term bearish, this is what I might do in a taxable account. That way, I am short-term protected on the downside and make a nice profit (due to the oversized put), while long-term maintaining my upside without triggering a tax event.
4. In Short: The Key Takeaways
Tesla and Nvidia puts were shrewd investment decisions by Cantor Fitzgerald in Q4 2024. Other legendary investors had cycled out of Mag 7 stocks during Q4 2024 as well, as reported in earlier legendary investor articles.
For example, as I mentioned in the article “Inside Norway’s $1.7 Trillion Wealth Machine,” in January 2025, the CEO of the Norwegian Oil Fund said:
“The best thing to do is always to do the opposite of everybody else. What will that be today? Well, if you were to do the opposite of everybody else, it would be to sell the US tech stocks, buy China,..”
Looking forward, potential investment opportunities for investors are MSTR as a leveraged play on Bitcoin, and Bitcoin ETF (IBIT) itself, since not much has changed since Q4 2024 for these two.
Strategy (formerly MicroStrategy – MSTR) is a deeply divisive company with passionate people on both sides. The advocates think it is a great leverage play on Bitcoin. And if Strategy, as the largest holder of Bitcoin, is able to generate Bitcoin products (Bitcoin bank, etc.) that can generate income, Strategy could undergo a similar transformation as Amazon did. Amazon developed from an online bookseller to THE retail store in the US, plus TV streaming, plus, plus, plus.
On the con side, if all that MSTR does is buy Bitcoin after Bitcoin, partially funded with equity issuances and partially funded with debt issuances, the upside is limited, although common equity shareholders should benefit somewhat from the innovative MSTR funding structure.
Full disclosure: I own MSTR and Bitcoin, among other investments. I also own gold, silver, and mining companies, among other investments. I am an “all of the above” investor. Will I be right? Who knows.
But more interestingly, Howard Lutnick and his prior firm (now owned by his sons) deeply believe in Bitcoin and MSTR, as shown by his personal investments (see YT video above) and Cantor Fitzgerald’s portfolio. Let’s see if the Commerce Secretary Howard Lutnick is correct. My money is on “yes,” but I am biased.
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"And if Strategy, as the largest holder of Bitcoin, is able to generate Bitcoin products (Bitcoin bank, etc.) that can generate income, Strategy could undergo a similar transformation as Amazon did" — that's an intriguing comparison. MSTR's strategy always seemed a bit nuts from the outside. But so did Amazon's in its early days. It'll be interesting to see how this will play out.