Green Mountain falls on investor criticism

Is the coffee company intentionally failing to disclose its financial information?

By Benzinga Oct 18, 2011 2:40PM

By Louis Bedigian, Benzinga Staff Writer


Green Mountain Coffee Roasters (GMCR) was falling again Tuesday, unable to recover after a legendary hedge fund manager criticized the coffee maker at an investor event.


David Einhorn of Greenlight Capital 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."


Shares of Green Mountain closed Monday down 10.4% to $82.50 after Einhorn's presentation.


This was 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 (SBUX) and Dunkin' Brands Group (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 (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 this week.


But Green Mountain isn't the only coffee company that's suffering. Starbucks, Dunkin' Brands and Peet's Coffee all fell Monday.


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! (YHOO). He also failed to successfully acquire a share of the New York Mets. Pfizer (PFE), Microsoft (MSFT), Apple (AAPL), and Sprint (S) are among his largest holdings.


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