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Boston Beer Co. Inc. Message Board

  • kb31416 kb31416 Feb 20, 2013 5:22 PM Flag

    Share Repurchase, Dilution for Exec Options/Grants

    A few data points that I would like explained:
    2012 Company repurchased 165,000 shares for $18m = $109/share.
    2013 YTD repurchased 82,000 shares for $11.5m = $140/share
    Yet from the unauditted summary, total shares outstanding INCREASED by 166,000 shares?
    It seems like the options and/or grants are getting out of hand, and that the much trumpetted share buyback has done nothing but absorb dilution.
    $29.5m over the last 13 months is $2.20 per share, which is HUGE compared to earnings.
    It appears that management is getting a disproportionate share of the benefit relative to shareholders.
    Please, show me how this is a mistake or that my figures are wrong.

    Sentiment: Hold

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    • It is even worse, If you look over the history of the 250 MM or so of share buy backs they have done, the float has basically stayed the same the entire time. Meaning they have taken 250 MM of shareholders money and pocketed it themselves.

    • Yes, the management is transferring the company cash to themselves, via stock options. grants and buybacks. Good tax advantages too. Same thing is happening to QCOM and other companies. However, the market cap of the company is small and market share is small. With canned beer coming up, their distribution and market share will pick up. $2B is peanuts for a national brand. Due to the valuation, got to stomach the volatility.

    • It's the game that we all know, going in. Fortunately, for LT holders it means the stock is always worth more a year out, because it has to be. This is the reason for the small float. SAM is essentially a private company, via Koch's private class of voting shares, yet he is sharing the wealth with investors(customers/fans/etc), through stock appreciation because of the buybacks. There is the explanation. When it dips, buy and hold. This has been going on for years and it's not likely to change. Watch for an increase in the buyback soon, with only $18M left. Especially if the stock falls, though 15% depletion growth is very strong. Volume over 2.7M, with 10-15% growth is solid.
      As for how shareholders benefit, how has the stock done over the last year?

      • 1 Reply to bbdott
      • DO YOU THINK what management is doing could possibly be legal? The board votes themselves a stock option. After the option has gained value with stock rising, the option is exercised from company treasury stock. The stock is repurchased into treasury stock using company cash. This is done over and over and over again. Stock rises due to continuous buy pressure with only 12.87 million shares outstanding. Cash is quietly converted from company to officers pocket. The Outstanding shares stay the same due to new shares being issued with options and same number of shares being repurchased. The company uses most of available cash repurchasing newly exercised options. There is little cash left to expand company into new product areas. No one says anything due to stock always advancing higher and higher. This is like having your own printing press. This seems too easy for management to convert millions of company cash to themselves. Is the entire upper management or board drinking from the same punch bowl? Is this legal ??

 
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