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On Tuesday, Semler Scientific, Inc.<\/a> (Nasdaq: SMLR), a medical software company, announced<\/a> that it had purchased 581 bitcoins for approximately $40 million as part of its \u201cbitcoin treasury strategy.\u201d <\/p>\n In the wake of the announcement, some paralleled the company’s strategy to MicroStrategy’s, which has entailed converting almost all of its treasury into bitcoin.<\/p>\n Caught my \ud83d\udc40<\/p>\n Today Semler Scientific announced a #bitcoin<\/a> Treasury strategy similar to Microstrategy @saylor<\/a> <\/p>\n – acquired $BTC<\/a> 8% of enterprise value A #smallcap<\/a> version of $MSTR<\/a> and $SMLR<\/a> is in the Russell 2000 $IWM<\/a> ?https:\/\/t.co\/5RGbreCTaj<\/a> pic.twitter.com\/vajSZM4zUz<\/a><\/p>\n — Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) May 28, 2024<\/a><\/p><\/blockquote>\n \u201cI couldn’t help but notice what MicroStrategy accomplished,\u201d Semler Scientific Chairman Eric Semler told Bitcoin Magazine.<\/p>\n \u201cIt’s amazing what they’ve done. They have this great story of taking a company that was basically trading at the market value \u2014 its cash was its complete value \u2014 and just turning that cash into a growth asset through their purchases of Bitcoin,\u201d he added.<\/p>\n \u201cIt was a brilliant move on Michael Saylor’s part, and he’s obviously proven himself with that strategy.\u201d<\/p>\n While Semler clearly admires Saylor\u2019s bold move, he seems a bit more conservative in his approach to adding bitcoin to his company’s treasury, as he stated that Semler Scientific doesn\u2019t plan to stray from its core mission \u2014 producing high-quality medical software \u2014 as it makes bitcoin its primary treasury asset.<\/p>\n \u201cYou have to go slowly and just figure out what the right approach for you as a company is,\u201d said Semler.<\/p>\n \u201cWe have a medical device software business. We have to weigh the pros and cons of that business and our bitcoin investments,\u201d he added.<\/p>\n With that said, Semler seems to be a true Bitcoin believer.<\/p>\n \u201cPhilosophically, I see merit in the argument that bitcoin is a really great alternative to gold,\u201d he said. \u201cI believe in gold, but I believe that bitcoin is kind of gold with optionality.\u201d<\/p>\n He went on to state how he appreciates Bitcoin\u2019s perfect scarcity, its technical durability and its \u201carchitectural resilience.\u201d<\/p>\n He also sees the writing on the wall in that Bitcoin is a technology that the millennial generation is embracing, while bitcoin the asset still only has approximately one tenth of the market capitalization of gold.<\/p>\n \u201cI\u2019ve become a believer, and coinciding with that belief, I thought, maybe buying bitcoin is a really good use of our excess cash.\u201d<\/p>\n And Semler Scientific has been flush with excess cash, as its a \u201cvery high-margin business,\u201d according to Semler.<\/p>\n After considering options like stock buybacks or investing the cash in the company\u2019s treasury to earn a yield, Semler and his board arrived at the idea of using a notable portion of the cash to buy bitcoin.<\/p>\n Well-versed in capital markets as well as in investing in small- and mid-cap (SMID-cap) businesses<\/a> \u2014 companies like Semler Scientific itself, which has a market cap of about $227 million<\/a> \u2014 Semler knows that SMID-cap companies need to do something if they want to stand out to investors.<\/p>\n \u201cIt takes a lot for a SMID-cap company to get the attention of investors,\u201d explained Semler.<\/p>\n \u201cWhen you can do something dynamic \u2014 like invest in digital gold when not a lot of other people are doing it \u2014 that\u2019s meaningful and significant,\u201d he added.<\/p>\n \u201cIf I were an investor, I\u2019d take a closer look just because it\u2019s differentiated.\u201d<\/p>\n Semler Scientific’s stock is currently trading at just over $32, approximately 50% higher than it was trading before its bitcoin treasury announcement.<\/p>\n\n
– 5X EV\/EBITDA
– 8X P\/E ratio<\/p>\n