WOODINVILLE, Wash. (
) -- Shares of
Craft Brewers Alliance
( HOOK) surged to a fresh 52-week high on heavy volume trading Wednesday morning.
The brewer's shares have risen steadily in recent months amid speculation that
recently polled our readers to see if they thought Anheuser-Busch saw long-term potential in Craft's growing corner of the niche craft beer market, or if the beer behemoth wouldn't bother with such a small-time player in the market.
On Wednesday, Craft shares jumped more than 10% ahead of midday on double their average trading volume, a day after the stock rose 1.7%, also on heavy volume.
"Craft Brewers Alliance has reached a market capitalization where larger investment funds can start to nibble at it," speculated Bryce Peterson, founder and president of
Washington Street Investments
Washington Street owns about 2.5% of Craft.
"When I started buying in the $2's and $3's per share, HOOK was a $40-$50 million market cap, so the funds or investors managing hundreds of millions of dollars ignored it," Peterson said. "They may have liked it a lot, but they literally couldn't buy enough to make a difference in their portfolios."
"If you're a small or micro cap investment company managing, for example, $200 or $300 million, you can start to buy HOOK now because the market cap and share trading volume finally makes sense," he added.
Size can indeed create liquidity. Craft's market cap is now just under $135 million.
Separately Wednesday, Zacks Investment Research ranked the top five beer makers as measured by beta with the understanding that lower-beta stocks generally trade with less volatility and are therefore considered less risky with more stable returns.
Molson Coors Brewing
ranked first with a beat of 0.7, followed by Craft with a beta of 0.7.
ranked third, also with a beta of 0.7.
Cia Cervecerias Unidas
, a Chilean beverage holding company, followed with a beta of 0.8, while
Cia de Bebidas das Americas
, a Brazilian brewer, rounded out Zacks' top five with a beta of 1.
As craft and artisanal beer consumption gains momentum in the U.S. --
from the likes of industry titans Anheuser-Busch,
and Molson Coors in the process -- there has been speculation that Anheuser-Busch would make a buyout offer for Craft.
The rumor mill was further churned when, in Craft's recent quarterly report, the collection of regional breweries reported
. Craft paid $5.8 million to Anheuser-Busch last year under the agreement, and $3 million in the first half of 2010. In its filing with the SEC, it said that Anheuser-Busch agreed to reduce that fee by nearly 30% which will result in additional annual top-line savings of $1.6 million. Craft said it expects to reinvest all of the savings from those fees into the development, marketing and support of its brands.
That little tidbit of information buried on page 24 of the filing was the report's key piece of news, Peterson, said.
He added that takeover speculation is premature, but conceded the Budweiser brewer "might think it's smart to buy a strong brand in the craft area and use its incredible distribution and marketing strengths to grow the acquired business."
Jay R. Brooks, beer columnist for
Bay Area Newsgroup
, insisted "no niche is too small for
Anheuser-Busch to put their fingers in," citing numerous occasions when the multinational company tried -- and often succeeded -- in dominating a particular beer category like organic or gluten-free varieties.
Even so, he didn't see what benefit Anheuser-Busch would gain by acquiring the remaining shares of Craft it does not already own. With the distribution relationship already in place, Anheuser-Busch's network of distributors already carry Craft's popular and growing brands of beers.
-- Written by Miriam Marcus Reimer in New York.
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