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On Tuesday, Semler Scientific, Inc. (Nasdaq: SMLR), a medical software company, bitcoin-treasury-strategy”>Announced that he had purchased 581 bitcoins for approximately $40 million as part of his “bitcoin treasury strategy.”
Following the announcement, some compared the company's strategy to that of MicroStrategy, which has involved converting almost all of its treasury into bitcoins.
<blockquote class="twitter-tweet”>
I caught my
Semler Scientific today announced a twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin Treasury strategy similar to Microstrategy twitter.com/saylor?ref_src=twsrc%5Etfw”>@saylor
– acquired twitter.com/search?q=%24BTC&src=ctag&ref_src=twsrc%5Etfw”>$btc 8% of enterprise value
– 5X EV/EBITDA
– P/E ratio 8X
TO twitter.com/hashtag/smallcap?src=hash&ref_src=twsrc%5Etfw”>#littlecap version of twitter.com/search?q=%24MSTR&src=ctag&ref_src=twsrc%5Etfw”>$MSTR and twitter.com/search?q=%24SMLR&src=ctag&ref_src=twsrc%5Etfw”>$SMLR It's in the Russell 2000. twitter.com/search?q=%24IWM&src=ctag&ref_src=twsrc%5Etfw”>$IWM ?https://t.co/5RGbreCTaj pic.twitter.com/vajSZM4zUz
— Thomas (Tom) Lee (non-drummer) FSInsight.com (@fundstrat) twitter.com/fundstrat/status/1795446285266300943?ref_src=twsrc%5Etfw”>May 28, 2024
“I couldn't help but notice what MicroStrategy accomplished,” Semler Chief Scientific Officer Eric Semler told bitcoin Magazine.
“It's amazing what they've done. “They have this great story of taking a company that was basically trading at market value (its cash was its full value) and simply turning that cash into a growth asset through its bitcoin purchases,” he added.
“It was a brilliant move by Michael Saylor, and he's obviously proven himself with that strategy.”
While Semler clearly admires Saylor's bold move, he seems a little more conservative in his approach to adding bitcoin to his company's treasury, as he stated that Semler Scientific does not plan to deviate from its core mission: producing high-quality medical software, since it makes bitcoin its main treasury asset.
“You have to go little by little and figure out what the right approach is for you as a company,” Semler said.
“We have a medical device software business. We have to weigh the pros and cons of that business and our investments in bitcoins,” he added.
That said, Semler appears to be a true believer in bitcoin.
“Philosophically, I see merit in the argument that bitcoin is a really great alternative to gold,” he said. “I believe in gold, but I think bitcoin is a kind of gold with options.”
He went on to state that he appreciates bitcoin's perfect scarcity, its technical durability, and its “architectural resilience.”
He also sees evidence that bitcoin is a technology that millennials are embracing, while bitcoin the asset still only has about a tenth of the market capitalization of gold.
“I have become a believer and, coinciding with that belief, I thought that perhaps buying bitcoins is a very good use of our excess cash.”
And Semler Scientific has had excess cash, as it is a “very high-margin business,” according to Semler.
After considering options such as share buybacks or investing the cash in the company's treasury for a return, Semler and his board came up with the idea of using a significant portion of the cash to purchase bitcoins.
Well versed in capital markets and investment in small and mid-cap companies (SMID-cap) — companies such as Semler Scientific itself, which has a market capitalization of around $227 million — Semler knows that companies with SMID capitalization must do something if they want to stand out to investors.
“A company with SMID capitalization has a hard time attracting the attention of investors,” Semler explained.
“When you can do something dynamic, like investing in digital gold when not many people are doing it, that is significant and meaningful,” he added.
“If I were an investor, I would look at it more closely simply because it is differentiated.”
Semler Scientific shares are currently trading at just over $32, about 50% higher than they were trading before their bitcoin hoard announcement.
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