Could This Beer Company be the Hottest Tech Stock of 2015?

US stocks took a beating last night.

Australian stocks will likely cop it too.

Are you ready to sell your stocks? This must be it, right?

You know…the crash.

Remember what we wrote earlier this week? That the mainstream and investors had turned bullish. But we also said it wouldn’t last long before the mainstream turned the other way.

That’s why we asked you if, when that happens, you’d still believe us about the longer term market uptrend. Now it’s the time for your answer.

Do you still believe us?

We hope so. Because do you know what? It’s not the crash.

In fact, we won’t even dignify it by talking about it any further, except to say one thing.

Based on what we’ve seen as the reasons for last night’s fall, we have to say the reasons are about as lame as you can get.

Get this case of ‘stating the obvious’ from derivatives firm IG this morning:

‘Volkswagen reported an 8% decline in sales in Russia in the first-half, while Metro (the eurozone’s second largest retailer) also said events in Russia had impacted its sales in Ukraine. Siemens warned that tensions could impact Europe’s growth.’

Why would that surprise anyone? Of course companies will see lower Russian sales. But since when did Russia become the world’s consumer focal point?

Yes, it’s an emerging market. But let’s not put it in the same category as China, India and Southeast Asia. And lower sales in Russia most certainly aren’t a reason for a wholesale crash in stock prices.

So let’s move on. We’ve already wasted enough of your time. Let’s talk about beer instead…

Through the backdoor

A report in yesterday’s papers suggested that the corporate watchdog wasn’t happy about tech companies conducting reverse takeovers of mining stocks.

It probably brings back bad memories of the internet boom.

So we can only imagine what the regulators will think of a tech company reversing into a beercompany.

Perhaps it will drive them to the bottle.

Investors on the other hand will probably welcome this takeover with open arms.

Reverse takeovers happen from time to time. You may also know it as a ‘backdoor listing’.

Some investors are wary of these investments. They think of them as being underhanded or a bit shady in some way.

But that’s rarely — if ever — the case.

More often than not, a company will seek a backdoor listing because it’s cheaper than starting a listing from scratch. It costs a lot of money to list a stock on the stock exchange.

There are listing fees, annual fees, legal fees, and of course the investment banking fees to pay for the capital raising. That all adds up.

So what can often happen is that a company will look for a way to buy into an already listed stock. In most cases, although the listed company may call itself a mining company or a brewing company, it’s usually just an investment vehicle.

In some cases the company doesn’t even have any employees. It raises the capital and then invests it in one or more projects. If those projects don’t pan out, and the company still has cash in the bank (and the management is bereft of ideas), they will sometimes look for an unlisted company to ‘reverse into’ the listed company.

So when a company is subject to a reverse takeover and it changes from a ‘brewing company’ to a ‘tech company’, nothing much has really changed at all.

From beer to 3D printing

The reason reverse takeovers can get a bad name is that they seem to happen during a bull market. Rather than take the time, effort and cost to list in the usual way, some companies prefer to do a reverse takeover because it’s much quicker.

That’s why some people see them as ‘fly-by-night’ investments. They list, make a bunch of cash selling stock into a bull market frenzy, and then the company withers and dies as fast as it arrived…just as the bull market ends.

Doubtless many investors and corporate watchdogs will take the same view of the latest reverse takeover proposal. But this one is a bit different to most.

Rather than a tech company buying into a mining company, this is a tech company taking over a brewing firm. Or rather, it’s a 3D printing company taking over a brewing firm.

Has that grabbed your attention?

We thought it might…

Read the rest of this article at Money Morning