David Einhorn Speaks at Value Investing Congress, Thinks Green Mountain Revenue is Too Good to be True - But is It?
Green Mountain Coffee (NASDAQ: GMCR) is struggling this afternoon after David Einhorn, the legendary hedge fund manager behind Greenlight Capital, shared his thoughts on the coffee maker at the Value Investing Congress.
Einhorn has numerous issues with the K-Cup maker, but his biggest complaint surrounds the company's lack of disclosure. According to Bloomberg, he thinks it's time for the company to become more transparent.
Further, Einhorn says that Green Mountain declined to speak to him during what the company claimed was a “quiet period.” Einhorn also noted that the firm has a “looming patent issue” on its single-serve coffees.
But Einhorn didn't stop there. He also said that Green Mountain has a “litany of accounting questions” while saying that the company's earnings could be “too good to be true.”
This is a huge blow to a company that was making progress with its growing K-Cup brand. Earlier this year, Green Mountain signed a massive deal with Starbucks (NASDAQ: SBUX) and Dunkin' Brands Group (NASDAQ: DNKN) that allows Keurig to sell branded K-Cups at cafes and retailers across the country. At the time of the Starbucks announcement, Peet's Coffee's (NASDAQ: PEET) dropped 12%.
While Bloomberg says that Green Mountain has increased more than 10-fold during the bull market that began on March 9, 2009, the company has watched its stock decline a significant amount today (roughly 11.5% at last check).
But Green Mountain isn't the only coffee company that's suffering. Starbucks is down 1.81%, Dunkin' Brands is down 1.67%, and Peet's Coffee is down roughly 2%.
Einhorn's assessment may be accurate, but he has had mixed results in 2011. According to Bloomberg, His Greenlight Capital took a modest loss after parting ways with a stake in Yahoo! (NASDAQ: YHOO). He also failed to successfully acquire a share of the New York Mets. Pfizer Inc. (NYSE: PFE), Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), and Sprint (NYSE: S) are among his largest holdings.
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