#Corporate #strategy of the future

💰 Treasury management in a company must always weigh the benefit of investing the excess cash in capital expenditures (CapEx) or strategic acquisitions against the option of increasing shareholder value via the payment of #dividends or share #buybacks.

Since the Global Financial Crisis, interest rates have been lowered to zero and the go-to strategy for many entities to increase shareholder value has been to implement share buybacks, instead of investing the excess cash into #treasuries or other accreting short-term instruments.

📉 The low cost of debt gave companies the possibility to increase the amount of share buybacks due to the use of leverage and by avoiding depleting all their excess cash reserves. The mixed used of excess cash and new low-cost debt taken on by the target company has the effect to boost company’s Earnings Per Share and support its stock price.

This move creates value to shareholders as the amount of shares outstanding is reduced and the nominal value of the shares outstanding increases by the same amount of the “cancelled” shares. A significant cash reserve can still be maintained by the company as a strategic reserve or to fund potential projects.

But since the creation of #Bitcoin and its growing acceptance in the traditional investing world, companies may now have better ways to increase shareholder value than making share buybacks ⚡ .

Given the past low interest rates environment, companies like MicroStrategy ($MSTR), led by Michael Saylor, utilized excess cash to increase their Bitcoin Per Share ratio. Any time the cost of debt is lower than Bitcoin's historical #CAGR, which has exceeded 50% in recent years, borrowing funds to invest in Bitcoin becomes an attractive strategy to enhance shareholder value 📈 .

Investing in a highly #deflationary asset instead of distributing cash to shareholders favours the principles of good #corporate #governance by prioritizing the long-term value creation rather than engaging in short-term financial engineering through buybacks. Companies demonstrate a commitment to preserving and growing shareholder value over the long run.

❇ Embracing Bitcoin early on can position companies as forward-thinking and innovative leaders in their industries. By demonstrating a willingness to adapt to emerging technologies and alternative financial instruments, corporations can enhance their competitive advantage and appeal to investors with a long-term vision.

How many more $MSTR are we going to see in the market as the price of Bitcoin rises to new highs and the value-creation strategy proves to be effective?