Green Mountain Coffee Plunges After Fund Manager Einhorn Turns Negative on Stock

Monday, 17 Oct 2011 12:42 PM

 

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Hedge fund manager David Einhorn is shorting the stock of Green Mountain Coffee Roasters, an announcement that knocked the company's share price down 9 percent Monday.

Green Mountain's stock has performed well, but the company's prospects may not be as good as some people think, said Einhorn at an investor conference.

Calling his presentation "GAAP-uccino," Einhorn told an audience at the Value Investing Congress in New York that Green Mountain has poor transparency. He also said the company should improve its disclosures, and that the market for its product is smaller than people who like the stock think.

The company has been a favorite with hedge fund managers such as John Thaler of JAT Capital, in part because of the rapid growth of its Keurig single-cup coffee machines. Some people have referred to Green Mountain's single-cup brew as the iPod of the coffee industry.

"Between the high cost of the machine and high cost of the coffee, this is a luxury item," said Einhorn, as went through a slide show explaining his decision to bet against the company's shares.

Green Mountain shares were down 9 percent to $83.61 on the New York Stock Exchange.

Greenlight Capital, which has about $8 billion under management, is down a little more than 5 percent for the year.

© 2014 Thomson/Reuters. All rights reserved.

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