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.
He has been doing the same thing for the best part of the last decade. Is he an idiot or rich? He has new options that he keeps getting that need to be in the money. Koch still controls around 1/3 of all shares with class B, so it's always headed up with the small float. If not, then it's sell out time for Jimbo. There just aren't many shares available. Many longtime holders have big gains they don't want to take the cap gain hit on, so those shares really aren't in the float. I know I don't want to pay taxes on gains from shares I own in the teens.
The small float, no debt and class B make this a game for Koch and Co. SAM is essentially a private company because of the class B. This is simply how they get rich now and to do it, the stock always has to be up a year after the new options price. If the stock falls, it's time to shrink the float and buy shares. It has been this way for years and will continue. At some point Jimbo will decide it's time to sell out on his terms, before he gets old and dies. He is 64.
He keeps getting more shares, so why not lock in the money? When it goes up next year, he will sell again. This has been going on for over a decade. It's a game with the small float and it always ends up in the money a year out. Just buy and hold on for the ride, it's been very easy.
Roper gets plenty more options and knows they will be in the money down the road. This happens every year, it's their year end "cash bonus". You need money to pay for really nice things and these guys don't like debt, based on the balance sheet.
This has been going on for so long it's crazy. The small float, yearly options, class B control and buyback whenever they need it, has made this the best ATM ever.
As long as you buy and hold you reap the reward. Especially if you buy on the occasional short term opportunity, created by a "miss" caused by advertising or cap ex timing.
Unfortunately I sold a few shares over a decade ago, but thankfully never made that mistake again. Though finally with SAM shares in an IRA, it could be time to play with a few shares in the sell high and buy after a miss game. When will the next miss be? Followed by a couple of blow outs of course:)
This has been so easy for so long and Angry Orchard is pretty good insurance right now too.
Thanks Jim and Marty!
Yes cb you should have! There is always next year with this one. It's not likely to change all of the sudden, unless Jimbo decides to sell and that isn't bad either.
cb, we all know where it's headed over time. As long as the new options keep pricing, they need to be in the money down the road. These guys are mega rich playing this game and keep getting options. Wonder which way it's headed:) Do you think anyone would pay a premium for Angry Orchard and Sam? It is amazing how long Jimbo and Marty have been doing this. The question is when does Jimbo decide it's time to sell? I bet he wants to decide to who, instead of letting someone else after he is gone.