Will Green Mountain Coffee Need A Wakeup Call?

While speaking with Bloomberg Television, hedge fund manager and founder and president of Greenlight Capital David Einhorn went over his views on Green Mountain Coffee (NASDAQ: GMCR) as an investment, discussing both what he sees as their misleading numbers and empty promises.

“Yes. We are still short Green Mountain.  It has been on the toughest things going on in our portfolio this year. The books are over caffeinated, if you would," said Einhorn, pun intended. 

"The company says that they sell a lot of coffee, there is no doubt they sell a lot of coffee. We do not think they sell anywhere near as much as they say and there are real discrepancies in the accounts. They had an analyst day a few weeks ago and they were asked to explain the numbers, and the CEO's cavalier response was they do not do straight math and they are not going to get into this now. If you do not get into this on an investor call, when are you going to?”

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He still, however, sees many scenarios where Green Mountain Coffee will work out, despite citing how bad this year has been with them.

“The competition has been increasing; they are losing market shares in their stores. Their platform has been commoditized. Anybody can make a K-Cup. The Supply is now out there," said Einhorn.

"The prices are falling. I think they will miss on the business side form an earnings perspective sometime over the next year. Ultimately they will be commoditized away. In addition, you have the regulatory risk when someone wakes up one day and says these numbers are not what they are represented to be.”

 At the time of this writing, Jason Cunningham had no position with the mentioned entities. Visit Jason on Twitter @JasonCunningham.