Is Semler Scientific adopting MicroStrategy’s Bitcoin Treasury Playbook?
On Tuesday, medical software company Semler Scientific, Inc. (Nasdaq: SMLR) announced that it had purchased 581 bitcoins for approximately $40 million as part of its “Bitcoin Treasury Strategy.”
Following the announcement, some people likened the company’s strategy to MicroStrategy’s strategy of converting nearly all of its funds into Bitcoin.
Got my GW.
Today Semler Scientific #Bitcoin Financial strategy similar to Microstrategy @Sailor
– Acquisition $BTC 8% of company value
– EV/EBITDA 5x
– PER 8 timesall #smallcap version $MSTR and $SMLR It’s in Russell 2000 $IWM ?https://t.co/5RGbreCTaj pic.twitter.com/vajSZM4zUz
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) May 28, 2024
“I couldn’t help but notice what MicroStrategy has accomplished,” Semler Scientific Chairman Eric Semler told Bitcoin Magazine.
“What they have done is truly amazing. They have a great story of basically acquiring a company that was trading at market value (its cash was outright worth) and converting that cash into a growth asset through Bitcoin purchases,” he added.
“It was a great move on Michael Saylor’s part and he definitely proved himself with that strategy.”
While Semler clearly admires Saylor’s bold move, he said Semler Scientific will take the approach of adding Bitcoin to the company’s treasury in a way that best suits the company. He said Semler Scientific has no plans to move away from its core mission of high production. – High-quality medical software — Adoption of Bitcoin as a primary financial asset.
“You have to take it slow and figure out what approach is right for you as a company,” Semler said.
With that being said, Semler seems to be a true Bitcoin believer.
“Philosophically, I think there is merit to the argument that Bitcoin is a great alternative to gold,” he said. “I believe in gold, but I believe Bitcoin is a type of gold with options.”
He went on to say that he appreciates Bitcoin’s absolute scarcity, technical durability, and “structural resilience.”
He also sees the writing on the wall in that while Bitcoin is a technology that millennials are embracing, Bitcoin assets are still only about a tenth of the market capitalization of gold.
“I became a believer and based on that belief, I thought buying Bitcoin would be a really good use of our surplus cash.”
According to Semler, Semler Scientific was flush with excess cash because it was “a very high-margin business.”
After considering options such as stock buybacks or investing cash in the company’s treasury to earn a return, Semler and his board settled on the idea of using a significant portion of the cash to purchase Bitcoin.
Well-versed in capital markets as well as investments in small and mid-cap companies (SMID cap), Semler is a company such as Semler Scientific, which has a market capitalization of approximately $227 million. Semler knows that SMID cap companies must: If you want to stand out to investors, do something.
“It takes a lot for SMID cap companies to get investor attention,” Semler explained.
“If you can do something dynamic like invest in digital gold when not many others are doing it, that’s meaningful and important,” he added.
“If I were an investor, I would take a closer look just because it’s different,” he said.
Semler Scientific’s stock is currently trading at just over $32, about 50% higher than before the Bitcoin Treasury announcement.
