Did Green Mountain Deserve a Downgrade?

CoffeeThe past five trading days have not been kind to Green Mountain Coffee Roasters (NASDAQ:GMCR). Shares were off nearly 9 percent through early-afternoon trading on Monday as more and more bears are waking up and initiating short positions on the stock.

Perhaps most notably, David Einhorn, founder and president of Greenlight Capital, announced a short position in the company at the end of 2011 that began a long and on-going conversation about the future of the coffee company. Shares are off nearly 50 percent since the announcement, and as of January 15, over 37 percent of the float was shorted.

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But the debate has gone both ways. Perhaps due to overeager pessimists overselling the stock and presenting a buying opportunity, shares have come up over 81 percent in the past three months, culminating in a strong fourth-quarter that came in ahead of expectations. Many investors, initially worried that the expiration of the patents on K-Cup technology would allow companies like Starbucks (NASDAQ:SBUX) to walk all over the smaller, Vermont-based roaster, overcame their concerns and put their faith and money back into the stock.

At a glance, the 4Q results verified their belief that things aren’t all bad news bears at Green Mountain. However, price action since the earnings were released last Wednesday suggests that those same investors may be taking their profits and heading elsewhere (perhaps to grab a latte at Starbucks) because of 2013 guidance below expectations…