This Is The Presentation That Predicted The Collapse Of Green Mountain

Photo: David Einhorn, Greenlight Capital Value Investing Conference

Green Mountain shares have been in free fall since last October when hedge fund magnate David Einhorn raised serious questions of the company’s accounting practices.Specifically, in three slides (pages 94, 95, and 96), he details field research Greenlight Capital conducted that showed how Green Mountain had ramped up production of Keurig brewers and K-Cups leading to inventory problems.

Einhorn’s call from six months ago was spot on.

Yesterday on the company’s earnings call, Fran Rathke, Green Mountain’s CFO, highlighted the hit the company took because of spoilage. 

“Approximately 150 basis points due to a higher write down of finished product and anticipated obsolescence of raw material inventory due to lower than anticipated sales of seasonal and certain coffee products,” she said.

Shares tumbled more than 40 per cent on the news and the company’s decision to slash its full-year guidance.

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