He does this year after year. He controls the company with his private class of shares, so he sells his public shares as more of his options vest. It's how he has so much real money that he can do with as he wants. The shares he sells, get replaced with options that vest. Been going on for years and the always increasing stock buyback keep options in the money year after year. A great gig if you can get it, but long-term its always good for shareholders too.
It should be a new high in the next year. The stock is always higher one year out, it's how it works for management to keep cashing the options that are always getting replaced.
Long term this is a good stock. Since management has options that expire every year, the stock needs to be up a calendar year out. The float is very small so management can influence the stock price with buybacks and planned misses caused by the timing of things like advertising.
With Koch's separate class of shares, it's almost like a private company that needs the stock price to keep bouncing up and down to make the options game work better. For it to work indefinitely the stock needs to go up year after year which is obviously good for investors that hold shares. If trouble ever really happens, Koch can decide to sell out for big money.
Once they start buying back the stock, it will bounce back up. The options always have to end up in the money, so the small float allows management to play around with the stock quite a bit. They buy back low, then sell the options high. It's been going on for years, but the positive is it has to be up a year out for the option ATM to work. Watch for an increase in the buyback shortly.
A year from now it will be worth more:)
They pulled their classic undersell and the market knows it. History always repeats with Sam Adams.
You are looking at one quarter, these guys have been underselling for years. The point is that this stock isn't usual, it's essentially a private ATM, but it has to benefit long term shareholders for it to work. These guys have played quarterly earnings for years, timing advertising and beer releases. My point about the new Rebel flavors being released nationally will cause a "surprise" in the first quarter. Stacks of the beer are showing up on floors everywhere. That = Big $$$. A small float that is in buyback mode can help move the price whenever they decide. There are many shares of this company that aren't even really traded, due to the huge tax hit associated with them. Like a good chunk of mine.
Being the market leader with less than 2% market share is definitely a huge positive. Plenty of growth opportunity, as well as a strong distribution system that can be very tough to crack if you aren't part of Bud, Miller or Coors. Competition is causing the craft market to grow very quickly and being the leader will be huge for long term success. Compare the craft market today to where the American lager category was 60-70 years ago. I think owners of Bud did OK during that time, when there was a bit more competition than B,M and C.
The share buyback is simply part of the equation to force the stock price to be up a year out when the new options price. For all practical purposes this is a private company due to the class B shares, but management uses the small float to put money in their pocket by making sure the shares are always up a year out. Long term holders will continue to be rewarded and if there ever starts to be issues, Jimbo can decide it's time to sell out for big money. Remember he isn't 40 anymore.
Also, the balance sheet looks pretty good with no debt.
SAM is the dominate national player. This quarter their "terrible" depletions were up only 13%. It's not one bit different this time. These guys know exactly what they are doing, including their option game and buyback program. There is a big reason the stock has such a small float. Not to mention that Angry Orchard is doing really well nationally and Winter isn't the big time of year for cider. There will be a big upside "surprise" in the next quarter or two. This is how the game is played, no different.
We have seen this more than a time or two. How long does it take to get back over $300? They buying back will start very soon and many long term shares aren't for sale. Wonder where this is a year from now, when management has more options to sell? New stacks of Rebel are showing up everywhere. How will that affect Q1? "Surprise"!
My guess in they "sneak" it in by March 13. Knowing this get hammered tomorrow, the buyback kicks in big time this quarter. Then "surprise" the new Rebel products create a blowout 1st quarter and oddly Jimbo and Co have bought back shares. This is too easy for the long term investor. Get ready to load up by late afternoon.
Or watch them miss and kick up the buyback. Guess where that puts the stock price a year out, after the new options vest? Same old, same old here. Buy on dips and hold. It's always higher a year after the options vest. Of course they always need to be able to sell because they are always getting more options. There is a very good reason for the small float.
Or look at their stock chart and the small float. There is always the buyback that happens at any time to keep the stock propped up so the options are in the money. Essentially this is a private company. Don't like it, buy something else. All long term holders have done well, regardless of when they buy. Note the point about long term, a year out.
You have to remember this could be a private company that Koch owns. One could argue that he is sharing some of the the wealth with his customers, going back to the initial share offering. The float certainly hasn't increased to dilute the small share owners.
It's definitely a different company, but the way the option ATM is set up, the stock price always has to be higher a year after options are granted. Staying on for the ride and buying on the occasional dips, has made LT investors lots of money. The alternative could have been for the company to be private and shareholders lost out. Not only has management gotten rich, shareholders have done great too. A win-win.