David Einhorn Gets Dissed on His Short Thesis for this Hot Stock
Bill Chappell, analyst for SunTrust (NYSE:STI), is furious today over an inaccurate short thesis from David Einhorn on Green Mountain Coffee (NASDAQ:GMCR). Chappell stated that Einhorn used SunTrust (NYSE:STI) research reports without permission and released an error ridden rehashing of SunTrust’s analysis to the public on Wednesday.
Among the errors pointed out by Chappell, Einhorn reportedly double-counted packaging costs for the company in his “profit to split” analysis. Einhorn also estimated the company’s EPS at $3.50, when SunTrust (NYSE:STI) estimated a much higher $9. Furthermore, Einhorn assumed 20% for private level share in K-cups, which Chappell says to be completely unfounded.
In a press release, Chappell said “first, there are NO beverage categories outside of water and milk in which private label consists of 20% of the market. Second, private label only accounts for 10% of coffee sold at grocery, a level that has not deviated more than 1% per year for the past 10 years. That means it would take at least a 10 standard deviation move to get to 20%; statistically impossible in the next five years.”