I have 1200 shares of bud stock do i sell or hold on for long run?

Question

I have 1200 shares of bud stock do i sell or hold on for long run?

Answer 1

Well, it is a complicated issue.  As you probably know, a Belgian company has made an offer to buy BUD for $65 a share.  The stock is up about 30% since that company's interest in Bud came to light about 6 weeks ago.  If the sale goes through, you would get a nice premium.  If it doesn't, the stock may fall back down a bit towards previous levels.  So if you think that management will block the sale, you may want to consider selling your stock now, and then you could pick it up for less if you want once it falls after a deal rejection.  If you think imBev has a good chance of getting this deal through, then you would get a bit more of a bump.

Answer 2

Sell.   As Boris pointed out, BUD has a limited upside potential with a much larger downside.  

BUD is looking to merge with Modelo in order to block the InBev buyout.  Even without that merger, there is a good chance that BUD will successfully resist InBev.     If they block the deal BUD will be back below $50 very quickly.    

Also, SABMiller is interested in a merger with InBev.  So they have an alternative for entering the US market other than fighting a hostile takeover attempt of BUD.

Remember YHOO.    You have a good gain now.  Take it and move on.    And forget the stop loss.  In a situation like this the price drop will likely be fast.

Answer 3

Goodday  my friend my advice is to hold on for long run.

Answer 4

hold on to it

Answer 5

That depends on if you think the Busch family is going to do a Yahoo/Yang reproduction, or if they're going to come to their senses.  You have a nice premium at present.  How bad do you need the money, and are you willing to risk a reduction?

Answer 6

In economic downturns such as those of today BUD usually turns in a sound performance.  Folks can usually afford beer and beer is the working/unemployed man's drink because of it's general afforability.  Trust me BUD is a good hold...If you want and own it at a cheap enough price write some covered calls against your position to assure profit...Or place a trailing stop that's GTC (good till cancelled) to follow it as it rises...than on a a back off it'll trigger and sell also resulting in your profiting from the position.  BUD is a great company that won't fail regardless of the economy.  PEACE!

Answer 7

Ok you gotta think this situation out like a trader would, you got a buy out offer on your firm, you prob made a huge profit so what to do. Well chances are that the deal will go through for 65 a share, but like YHOO and MSFT deals dont always go down. So your maximum gain now is about 3 dollars a share. Your maximum loss if the deal falls through is about 20, back to where where the stock was pre-buyout rumors. With this kind of skewed risk to reward ratio I would say to sell at least 50% of your stock knowing that you made a good profit and let the rest ride if you want. If the price falls you can still buy back 600 at cheaper levels.

Answer 8

I believe that the board will have little recourse but to accept the offer, at its current premium.  The declining dollar makes companies like very attractive to overseas investors.  Whether or not this is a good fit long term will remain to be seen.  The Belgian company is known for cost-cutting, and Bud seems to carry a few to many workers, so if the buy goes through there will most likely be layoffs.  Countering this hwoever, is the promise that Bud will get new distrobution channels worldwide which may increase its demand.

My gut reaction would be to sell after the buyout, which I believe the board will accept.  If you want to have a longer term position with Bud, I'd wait to see how they handle the US workforce, and what they do in the ad space before jumping back in.