Key Takeaways
- VanEck's Matthew Sigel warns that public companies buying bitcoin risk shareholder dilution if their market cap approaches their bitcoin holdings.
- Semler Scientific's share price has fallen over 45% in 2024, bringing its market cap close to parity with its 3,808 BTC treasury.
- Sigel urges firms to pause share offerings and prioritize buybacks if stock trades below NAV, and to tie executive compensation to NAV growth, not bitcoin accumulation.
VanEck flags risk for bitcoin-buying companies
Matthew Sigel, head of digital assets research at VanEck, has warned that public companies accumulating bitcoin could face significant risks if their stock price falls near or below the net asset value (NAV) of their bitcoin holdings.
In a recent statement, Sigel noted:
“If the stock trades at or near NAV, continued equity issuance can dilute rather than create value.”
SMLR
While no public company has traded below its bitcoin NAV for a sustained period, Semler Scientific, Inc. (SMLR) is now approaching parity.
Semler, a medical technology firm that began purchasing bitcoin in May 2024, holds 3,808 BTC—currently worth $404.6 million.
Despite bitcoin’s strong performance this year, Semler’s share price has dropped by over 45%, bringing its market cap to roughly $434.7 million, nearly equal to its bitcoin value.
Safeguards urged as dilution risk grows
Semler and similar firms have raised capital via multiple equity and debt offerings to buy more bitcoin.
Sigel recommends these companies implement safeguards, such as pausing at-the-market share offerings if their stock trades below 0.95x NAV for at least 10 days.
He also advised prioritizing share buybacks when bitcoin appreciates but the stock price fails to reflect those gains, and suggested a strategic review—potentially including a merger or ending the bitcoin strategy—if a NAV discount persists.
Executive pay should focus on NAV growth
Finally, Sigel argued that executive compensation should be tied to growth in NAV per share, not simply the size of the bitcoin stack or share count.
He concluded:
“Once you are trading at NAV, shareholder dilution is no longer strategic. It is extractive.”
