Green Mountain stock price slide

#1: Post by **bernie** » November 16th, 2011, 8:44 am

I've been following Green Mountain Coffee Roaster's stock slide and accounting concerns for a few months and am curious that it isn't mentioned on HB. I'm wondering if I've missed the thread or if the loss of over a billion dollars in market capitalization and the company being in lots of business news articles is of no interest to the coffee crowd. GMCR has driven much of the consumption of the general coffee world recently and has had one of the most direct impacts of any element of coffeedom in recent history. Yet, nary a word. I find that quite interesting.

#2: Post by **oqcoffee** » November 16th, 2011, 11:22 am

I read a great presentation on this a few weeks back. Basically arguing that because GMC sells the brewing machines at near cost and only a fraction of their revenue comes from roasted coffee, they are now a manufacturer of K Cups (i.e., don't think of them as a roaster anymore). They depend on the K Cups for most of their revenue. Thus, the pending end of their patent on the K Cup design, will more or less spell difficult times ahead for the company as cheaper alternative K Cup designs flood the market. Recent moves to bring in Sbux, Dunkin, and others are attempts to stymie future losses by folding in competition to their portfolio even if at significant loss to revenue.

November 16th, 2011, 11:23 am

Isn't the K-Cup patent running out in 2012?

November 16th, 2011, 11:33 am

They roast a lot of coffee to put in those K-cups.; they also do a lot of institutional coffee, for instance, they supply McDs in the East.

The P/E ratio on their stocks, even today, is ridiculously high; and the major two Green Mountain news items for the past three years was 1. people trying to figure out why the stock prices hadn't slid long ago; 2. speculation that they would be putting out Starbucks branded K-cups.

So the reason we don't talk about Green Mountain all that much may be because their stock prices have much more to do with people's investment habits (fund managers buying stocks or stock futures they know are overvalued because they are "hot," and they are vain enough to think they can dump them five minutes before all the other wannabe hotshots will)

November 16th, 2011, 4:32 pm

The guy who called the Lehman Brothers collapse is the one who first called the irregularities to attention at GMCR. His name is Einhorn and he did a pretty good 120-slide presentation of his concerns of GM. You can find the presentation on any stock quote site. What was interesting is the nuts-and-bolts of how coffee business is done at that level. They acquired several competitors who seemed to be old SCAA buddies of theirs for hundreds of millions of dollars each. I'm not savvy enough to drill down into the financials so it all looks the same to me. But, when I read that the company is now capitalized in the billions I realize I haven't been paying much attention to the consumer side of coffee for a long time.

November 16th, 2011, 6:19 pm

I have yet to look into this at all, but from reading these posts, one word kept coming to mind: short.

-phillip

#7: Post by **Boldjava** » November 16th, 2011, 9:45 pm

I have yet to look into this at all, but from reading these posts, one word kept coming to mind: short.

Is 23% of present float enough (and climbing)?

http://finance.yahoo.com/q/ks?s=GMCR+Key+Statistics

Coffee Holding is another (32% of float) -- made a passel on trading futures -- now what?
http://finance.yahoo.com/q/ks?s=JVA+Key+Statistics

B|Java