Inflation is inevitable! A Nasdaq-listed company plans to invest $250 million in assets such as Bitcoin and gold.

The publicly traded company MicroStrategy, with a market value of $1.2 billion, announced during its online financial report meeting for the second quarter of 2020 that it plans to invest $250 million in "alternative assets." This financial strategic shift may lead the company to purchase Bitcoin.

Holding a Large Amount of US Dollars is Not Wise

MicroStrategy, founded in 1989, is a global provider of enterprise software platforms for business intelligence (BI), mobile intelligence, and web applications. The company has been recognized by Gartner for eight consecutive years and has a certain level of reputation in the BI field. MicroStrategy is also a publicly traded company on the NASDAQ with a market value of approximately $1.2 billion at the time of writing.

According to MicroStrategy's earnings call transcript on Motley Fool, CEO Michael Saylor stated during the July 28th earnings call that the US government has been continuously stimulating the market through monetary policies over the past three months, which has had a serious impact on the macro economy. Saylor pointed out that while MicroStrategy holds a large amount of US dollars on its balance sheet, it is not a good choice for asset allocation given that the US government is unlikely and not considering raising interest rates in the short term. Saylor said:

"The US Dollar Index (DXY) is weakening. Confidence in the overall market and fiat currencies is diminishing, and we have seen rebounds in most asset classes in the second quarter. Therefore, continuing to hold a large amount of US dollars as an asset allocation strategy is not a wise choice, prompting us to reconsider this."

Investing in Alternative Assets to Hedge Against Inflation

Saylor revealed that the company will adopt a new financial strategy in the coming year. In addition to returning a portion of capital ($250 million) to shareholders through stock buybacks, another portion of capital ($250 million) will be invested in alternative assets other than the US dollar. According to the earnings call transcript, these alternative assets include gold, silver, and Bitcoin as inflation-resistant store-of-value tools.

"While using the US dollar as a store of value for capital may dilute the value of the capital itself, it does not mean that we do not need capital. Looking at other assets, as the US dollar weakens, gold, silver, Bitcoin, and stocks are all absorbing their value. It makes sense to transfer our reserve assets into investments that cannot be easily or are unlikely to be increased, as almost everyone in the current market believes that inflation is imminent."

Since the conclusion of the earnings call, MicroStrategy's stock (NASDAQ: MSTR) has risen by 5% at the time of writing.