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The Boston Beer Company, Inc. Message Board

  • peristentone peristentone Jan 22, 2013 7:59 PM Flag

    Reason for High Price?

    SAM seems to be trading way above intrinsic value. Is this because of some kind of rumor of an acquisition, given recent activity in the same sector?

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    • There is, and has been, HUGE short interest, on the order of 30+%, little of which can have been covered with the trading volume that has been seen since the Dec 13th pop in price. Short interest has gone from 2.7 million shares to 2.3 million on 12/31, and the stock has gone from ~$114 to todays $145. My guess is that we are in the middle of a protracted short squeeze with shorts gradually becomeing insolvent, getting margin calls, and sold out of their positions with $30/share losses (and more if they are on margin).
      I agree that the PE is a bit on the expensive side (to the extent that I have sold June 145 calls against my stock ...), but I have no desire to sell, and agree that SAM has a great future. I am honestly expecting a pull back to the 130s at some point, so I am coontent to let my calls erode away and collect premium for the next 5 months. I am not, however, foolish enough to short this illiquid growth stock.
      Thou shalt not short thy neighbor.

      Sentiment: Hold

    • It's not overpriced, the company is hitting on all cylinders, the float is very small and management gets options that price every year, so the buyback makes it such that the shares are always worth more a year down the road. Buy and hold here, is very rewarding, as the company continues to grow volume in the relatively unlimited growth craft beer market. SAM can, and may be this centuries BUD, with little over 1% of the US beer market now.

    • The only thing I can think of, and it's pure speculation, is that their gaining traction in the U.K.

161.02-0.09(-0.06%)Jun 24 4:02 PMEDT