Tuesday, Semler Scientific Company (Nasdaq: SMLR), a medical software company, Announce It purchased 581 bitcoins for approximately $40 million as part of a “bitcoin treasury strategy.”
In the wake of the announcement, some paralleled the company's strategy with MicroStrategy's, which entailed converting nearly all of its treasury into bitcoin.
You caught me 👀
Semler Scientific today announced A #Bitcoin The treasury strategy is similar to the micro strategy @saylor
– Acquired $ Bitcoin 8% of the establishment value
– 5X EV/EBITDA
– P/E ratio 8Xa #beanie A copy of $MSTR And $SMLR Found in Russell 2000 $IWM ?https://t.co/5RGbreCTaj pic.twitter.com/vajSZM4zUz
– Thomas (Tom) Lee (not the drummer) FSInsight.com (@fundstrat) May 28, 2024
“I couldn't help but notice what MicroStrategy has accomplished,” Semler Scientific president Eric Semler told Bitcoin Magazine.
“It's amazing what they've done,” he added. “They have this amazing story of taking a company that was essentially trading at market cap — their cash was their full value — and turning that cash into a growth asset through their purchases of Bitcoin.”
“It was a great move by Michael Saylor, and he's clearly proven himself with that strategy.”
While Semler is clearly impressed by Saylor's bold move, he seems a bit more conservative in his approach to adding Bitcoin to his company's treasury, stating that Semler Scientific has no plans to stray from its core mission — producing high-quality medical software — as he makes Bitcoin his primary treasury asset.
“You have to go slow and figure out the right approach for you as a company,” Semler said.
“We have a business in medical device software. We have to weigh the pros and cons of this business and our investments in Bitcoin,” he added.
However, 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 optionality.”
He went on to state how much he appreciated Bitcoin's complete rarity, technical robustness and “architectural flexibility.”
He also sees the writing on the wall that Bitcoin is a technology embraced by millennials, while the original Bitcoin still has roughly a tenth of the market capitalization of gold.
“I became a believer, and in conjunction with that belief, I thought, maybe buying Bitcoin would be a good use of our spare money.”
Semler Scientific was flush with excess cash, as “a very high-margin business,” according to Semler.
After considering options such as buying back shares or investing cash in the company's treasury to generate a return, Semler and his board of directors came up with the idea of using a notable portion of the cash to buy Bitcoin.
– Well versed in capital markets as well as investing in them Small and medium enterprises (SMID-cap). – Companies like Semler Scientific itself, which has Market value is about $227 million – Semler knows that SMID companies need to do something if they want to stand out to investors.
“It takes a lot for a SMID-capitalized company to attract the attention of investors,” Semler explained.
“When you can do something dynamic — like investing in digital gold when a lot of people aren't doing that — that's useful and important,” he added.
“If I were an investor, I would take a closer look just because it's different.”
Semler Scientific stock is currently trading at just over $32, roughly 50% higher than it was trading before the Bitcoin treasury announcement.
