Semler Scientific Mirrors MicroStrategy's Bitcoin Strategy
In a strategic shift, Semler Scientific has adopted a bitcoin strategy similar to that of MicroStrategy. This decision came shortly after Eric Semler became an active investor in April 2023. Inspired by MicroStrategy's notable success, the medical device manufacturer has already invested over $60 million in bitcoin and plans to increase its holdings post-SEC approval for a capital raise.
Historical Context and Decision Making
Semler Scientific was co-founded in 2007 by Dr. Herbert Semler, a former flight surgeon and cardiology leader. Fast forward seventeen years, and the company has converted a significant portion of its cash holdings into bitcoin. Eric Semler, son of the co-founder and current chairman, pushed for this move. He drew inspiration from both his family’s history and the performance of MicroStrategy under Michael Saylor's leadership.
Eric Semler stated, "Michael Saylor’s insights about underperforming companies with large cash reserves resonated with our board." Following this, the firm studied MicroStrategy's success and saw value in adopting a similar strategy.
Bitcoin Investment and Market Impact
To date, Semler Scientific has purchased 929 bitcoins for a total of $63 million, averaging just under $68,000 per bitcoin, as per their second-quarter earnings report. Despite a recent price drop to approximately $57,000, resulting in a $10 million value reduction, the board remains confident in their strategy. Eric Semler emphasized, "The ultimate test of conviction is whether you will buy something that's down and that you bought 20% higher."
Future Plans and Capital Raising
Taking a cue from Saylor, Semler Scientific has plans to raise additional capital to purchase more bitcoin. The company filed a $150 million mixed shelf offering in June and awaits SEC approval to proceed.
Eric Semler, a professional investor since 1998, began buying bitcoin personally in 2016. He noted that bitcoin's resilience during crises, such as the collapse of Silicon Valley Bank in 2023, solidified his belief in the cryptocurrency’s staying power.
Conclusion
The decision to use bitcoin as a treasury reserve was a strategic business move aimed at providing shareholder value. With excess cash on hand and generating positive cash flow annually, Semler believed the firm deserved more credit from Wall Street. "It was the result of a lot of soul searching about how to provide shareholder value," he concluded.
