David Einhorn: Questions About Green Mountain Coffee’s Accounting

Shares of Green Mountain Coffee (NASDAQ:GMCR) are getting hammered today on news that David Einhorn, president of the activist hedge fund Greenlight Capital, has called out the company’s management for failing to adequately address accounting questions.  Einhorn made these remarks in the context of a speech he gave at the Value Investing Congress today, saying, in part that he thought Green Mountain’s latest earnings release was “perhaps to good to be true.”

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The company’s shares have performed much better than the market overall.  The shares recently traded at $81.95, down $10.14, or 11.01%, on the day.  The shares have traded in a 52-week range of $29.02 to $115.98 and its market capitalization is $12.55 billion.  15.18 million shares are sold short as of September 30, as compared to 15.52 million shares sold short in the prior month.  The short ratio is 5.1 and the short position represents 14.2% of its float.  The float is 120.04 million shares and the average volume for the past 10 trading days is 4,443,260.  Note that the 10-day trading volume average is skewed by today’s volume of 12.8 million shares, against a 3-month average of 3.3 million shares.

It is not known whether Einhorn’s firm has established a short position in the stock.

About the company: Green Mountain Coffee Roasters, Inc. roasts Arabica coffees and offers various coffee selections.  The Company’s products include single-origin, estate, certified organic, Fair Trade, signature blends, and flavored coffees sold under the Green Mountain Coffee Roasters brand.  Green Mountain serves offices, supermarkets, and convenience stores, and operates a direct mail business.

(Note: Selected financial data are sourced from Yahoo! Finance.  All data are assumed to be accurate.)

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