Author: Weilin, PANews
MicroStrategy, the listed company with the largest Bitcoin holdings in the world, has adopted a strategy of increasing its Bitcoin reserves, which has not only been emulated by Metaplanet, a Japanese listed company, but has also become a case study for Semler Scientific, a US listed medical technology company.
On May 28 of this year, the then $200 million medical company announced its Bitcoin reserve strategy, purchasing 581 Bitcoins for $40 million. The following week, on June 6, Semler Scientific announced the purchase of another 247 Bitcoins for $17 million, with CEO Doug Murphy-Chutorian emphasizing in the announcement that this was just the beginning.
On August 6, Semler Scientific announced that it had purchased an additional 101 bitcoins for $6 million. Since announcing the adoption of the Bitcoin asset reserve strategy on May 28, 2024, the company has purchased a total of 929 bitcoins for a total of $63 million. Recently, Eric Semler, chairman of Semler Scientific, revealed the story behind the company's strategic transformation to increase its Bitcoin reserves.
Share price significantly boosted, founder is happy to invest in company’s “new gold”
Semler Scientific is an American public company that develops and manufactures innovative products and services to support the early detection and treatment of chronic diseases. The company's founder, Dr. Herbert Semler, served as an aviation surgeon in the Korean War and later worked as a cardiologist at a hospital in Portland. He co-founded Semler Scientific (SMLR) in 2007. Semler Scientific's stock price peaked at $153.21 on October 1, 2021, but since then, its competitiveness and popularity have been tepid compared to some large companies.
However, Semler Scientific’s stock price has received a significant boost since announcing its adoption of a Bitcoin asset reserve strategy on May 28, 2024. On May 24, Semler Scientific's stock price on Nasdaq was US$23.32, and rose to US$40.57 on June 12, an increase of 74%. As of August 7, in the context of falling U.S. stocks, SMLR's stock price has fallen back to US$27.52.
"He's very excited," said Eric Semler, son of founder Herbert Semler, of his father's reaction to the new investment strategy. Eric Semler said his grandfather Harry Semler considered gold a great investment in his time, so his father Herbert is happy to see the company investing in the "new gold."
Eric Semler has been a professional investor since 1998. He met Bitcoin entrepreneurs in the early days of the cryptocurrency field and began buying personally in 2016. Eric said that his investment focus has always been future trends, and he likes to find stocks and companies that can achieve this goal, from small-cap to large-cap companies. However, Eric's investment moves in Semler Scientific have not been active until April 2023, when he began to play a more active role driven by corporate governance issues.
Break the “zombie company” dilemma and follow the example of MicroStrategy
When American software company MicroStrategy began investing in Bitcoin in August 2020, some people thought that then-CEO Michael Saylor was crazy. Although Bitcoin plummeted in 2022 and MicroStrategy had huge paper losses due to its Bitcoin purchases, its stock is still higher than before investing in Bitcoin. Now, facing the current bull market, the company's market value is close to $30 billion - nearly 30 times that of August 2020. On August 7, according to Tree News, Michael Saylor said that he personally holds more than $1 billion worth of Bitcoin.
MicroStrategy's success story has been noticed by other companies, and now it has more and more imitators.
PANews has reported on the Bitcoin investment strategy of Metaplanet, a Japanese listed company. Metaplanet once had an economy hotel business line and has announced large purchases of Bitcoin since April this year. As of July 22, Metaplanet held a total of 245,992 Bitcoins. After the transformation to investing in Bitcoin, the market sentiment was quickly boosted. After a long period of slump, the company's stock price ushered in a strong growth of 360% in the two months from April to June.
On August 8, Metaplanet announced that it had successfully obtained a loan of 1 billion yen (annual interest rate of 0.1%), and the funds will be used to further purchase Bitcoin.
Michael Saylor, Chairman of MicroStrategy
In early May of this year, Michael Saylor, chairman of MicroStrategy, once again expressed his views on Bitcoin in the On The Tape podcast, talking about why Bitcoin can help to get out of trouble for dead money and zombie companies: "We are too ambitious to call on a country to do this. A more pragmatic and practical next step is to let a thousand companies in the Russell 2000 index do this. These companies are all dead money and zombie companies, and let them start doing this. There are also many such zombie companies in Japan. So the problem is that thousands of companies have dead vaults because their capital assets have negative real returns in the vaults."
“I think the obvious beneficiaries, hopefully among people listening to this podcast, are shareholders, officers, and directors of small and medium-sized companies, especially public companies, that are essentially unable to outperform the ‘Big Seven.’ If you think you can’t outperform the likes of Google, Meta, Microsoft, and Nvidia, and you have some cash on hand, then you should either take that cash and buy Bitcoin, or issue equity to buy Bitcoin, or issue bonds, preferably convertible bonds that are convertible to equity to buy Bitcoin, because that allows you to recapitalize with appreciating assets, rather than losing capital or holding depreciating assets that have negative real yields and are consuming shareholder value.”
This time, Eric was obviously inspired by Michael Saylor's ideas. Eric said, "Michael Saylor's warning about zombie companies that have a lot of cash, are small in scale and not paid attention to in the stock market resonated with all members of our board of directors." Therefore, they decided to study MicroStrategy's success and saw the value of adopting its strategy.
On Monday (August 5), the crypto market fluctuated significantly, and Eric Semler also said that the price of Bitcoin fell to about $57,000, reducing the value of the company's Bitcoin assets by about $10 million, but this did not change the board's beliefs. "When you have such a strong belief in something, you have to be willing to stand up and buy when things don't go well," he said. "I think the ultimate test of belief is whether you will buy things that fall and you once bought them at a price 20% higher."
Drawing on Michael Saylor's strategy, Semler Scientific has begun raising funds in the capital markets to buy more Bitcoin. The company submitted a $150 million mixed shelf offering model stock issuance application in early June and is currently awaiting approval from the U.S. Securities and Exchange Commission to proceed.
