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The Boston Beer Company, Inc. Message Board

  • peristentone peristentone Feb 19, 2013 1:28 PM Flag

    Truly Stupid Valuation

    What accounts for beer company being valued like a tech company? They are giving this thing a PE of 30 on forward earnings, and you are paying over $1B for free cash flow around $20M? It is over 8x book value!

    Is there some kind of rumor of consolidation or acquisition here? The current valuation looks unbelievably stupid, and the only thing I can think might account for this would be a possible buyout.

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    • Interesting volume today. I saw over 200k shares (~2x normal), then looked at a 1 day chart and there is a single 90k share trade. Wonder what that is? There is zero trading from 2:50 PM at about $154 until 3:40 PM with this 90k shares at ~$156.50.

      Sentiment: Hold

    • Too many shorts and no float, not really very hard to figure out. More pain to come for shorts.

    • This is a slow motion short squeeze of epic proportions. 30+% short interest before Dec 13th price spike in a very illiquid stock. Most share owners are long term that do not have their shares available to be borrowed and sold short, so the percent of float stated is actually significantly lower than the percent of available shares. Short interest is reported about every 2 weeks, and it has not declined significantly (although by a small amount). Average daily valume is also less than would be required to cover the short interest.
      These guys are having their skin pulled off with a pliers, and their is no way out for them. Even today is just average volume.
      Also, most tech companies now sell at near or single digit PEs (MSFT, STX, INTC, DELL, CSCO).
      I am hanging on to my SAM shares, although I have sold Sept 150 calls against them. I have been rolling out and up since the December pop, and I do not expect to be exercised in Sept, but it will be a wild ride as the short squeeze continues. All things considered, I wish I had not sold them, but the current price is a bit wacky.

      Sentiment: Hold

      • 1 Reply to kb31416

        Per Naz, the short interest is only 2M out 13M shares (16%). The bad part for shorts is that the float got to be low because it will take 82 days to cover as of 1/31/2013. No wonder the stock has been spiking. Tomorrow earnings will come out, but expectations are subdued. Will the shorts cover some more ahead of earnings? At some point. after the shorts exit, the stock may float down.

190.28-1.77(-0.92%)Aug 29 4:02 PMEDT