Green Mtn. Coffee Drops on Einhorn Comments
Greenlight Capital President David Einhorn
Peter Foley/Bloomberg
Greenlight Capital President David Einhorn speaks at the Value Investing Congress Monday.
Greenlight Capital President David Einhorn speaks at the Value Investing Congress Monday. Photographer: Peter Foley/Bloomberg
(Corrects Wellington’s stake in seventh paragraph.)
Green Mountain Coffee Roasters Inc. (GMCR), the seller of Keurig single-pack coffee packets, fell as much as 11 percent after hedge-fund manager David Einhorn said the company should improve its disclosure.
The shares fell 9.8 percent to $83.07 at 12:23 p.m. in New York, after earlier dropping to $81.61.
Green Mountain has reduced transparency and the company needs to improve disclosure, Einhorn, president of Greenlight Capital Inc., said today at the Value Investing Congress in New York. He said that Green Mountain declined to speak to him while citing a quiet period. The company has a “looming patent issue” on its single-serve K-Cups, he said.
The company has a “litany of accounting questions,” Einhorn said, adding that its latest earnings were “perhaps too good to be true.”
Green Mountain has sought to boost sales through its Keurig brewer and single-serve K-Cups. The coffee company partnered with Starbucks Corp. (SBUX) and Dunkin’ Brands Group Inc. earlier this year to sell branded K-Cups at cafes and in grocery and retail stores.
Green Mountain has increased more than 10-fold during the bull market that began on March 9, 2009, the third-biggest gain in the Standard & Poor’s Midcap 400 Index. The shares trade for 52 times forecast earnings for 2011, compared with an average multiple of 15.4 for the index as a whole.
The company’s biggest holders on June 30 included Fidelity Management with 12.5 percent of the stock, according to filings with the Securities and Exchange Commission. Wellington Management had a 8.7 percent stake on that date and Vanguard Group controlled 3.3 percent, data compiled by Bloomberg showed.
Einhorn, the hedge fund manager best known for shorting Lehman Brothers Holdings Inc. before it collapsed in September 2008, has had mixed results in 2011. His Greenlight Capital Inc. sold a stake in Yahoo! Inc. for a “modest loss,” he told investors in a July letter. His attempt to buy a share of the New York Mets baseball team fell apart in September.
To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.
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