BREWER'S DEAL GOES FLAT : BOSTON BEER STOCK DECLINES AFTER INITIAL PUBLIC OFFERING.

Byline: Reed Abelson The New York Times

The lesson of this story: Be careful - you may get what you ask for.

When Boston Beer, the maker of Samuel Adams beer, went public a year ago, its founder, C. James Koch, insisted on letting the small investor in on the deal.

``I wanted to give the people who had made Boston Beer the leading craft brewer in America a chance,'' Koch said recently.

In a deal announced on its bottles, a nice bit of advertising, the Boston Beer Co. allowed each small investor to buy one unit of 33 shares for $495, or $15 a share.

Given that small investors often cannot get a new stock until it is trading at levels far higher than the initial public offering price, it is no surprise that the response was enthusiastic. ``We could have done the whole deal this way,'' Koch said.

The initiative won Boston Beer lots of applause. ``We think it's a fantastic example of how IPOs should be available to individual investors,'' said Gerri Detweiler of the National Council of Individual Investors.

Small investors often get only a 10th of the shares in new issues, but Koch set aside one-quarter, or nearly a million shares.

Sadly for the investors, Boston Beer's stock has since gone flat. It closed Friday at $11.75, leaving the buyers of the units with a 22 percent paper loss on their $15-a-share bargain.

Faced with a proliferation of specialty brewers and competition from big beer makers like Anheuser-Busch, investors began to wonder just how much Boston Beer could grow and which companies could survive. And last month, the company announced that growth was slowing.

This sounds like the story of many popular new stocks, which lose their froth at the first difficulty. Even at $15, Boston Beer stock was priced at more than 50 times its earnings per share over the previous year.

``Companies tend to go public when industry fundamentals are strong,'' said Robert S. Natale, the editor of Standard & Poor's Emerging and Special Situations newsletter. ``You had a very strong and growing market for specialty beers'' then, he said.

But Boston Beer's small investors appear to be a devoted bunch. While such investors are often accused of selling their shares quickly, Koch estimates that two-thirds of the 30,000 people who took up his unusual offer last year still hold their shares.

Of course, these people are not necessarily the same as the small, active traders who would scramble to find shares of Netscape Communications or the next hot new issue. Many of the small investors are Boston Beer's loyal drinkers.

``An investor who buys based on a quality product is more likely to stick with the company and the stock, whether it's Boston Chicken or Boston Beer,'' Natale said.

Despite small investors' demand for such offerings, other companies have not rushed to imitate Koch's democratic ideals.

``You really have to fight the whole system: the investment bankers, the SEC, the current regulations,'' said Koch, noting that Goldman, Sachs, one of his underwriters, refused to handle the consumer deal. ``The entire regulatory system is not set up to allow shares to be available for consumers.'' Goldman Sachs declined to comment.

Nor was the offering cheap. Because the company had to decide on a price for this consumer offering before the regular offering price was set, the $15 that small investors paid was $5 a share less than the big guys paid. That unintentional shaving cost nearly $5 million.

Koch also said the company spent more than $1 million to print 200,000 prospectuses and to return 100,000 checks when the offer was oversubscribed.

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