After Green Mountain Coffee slashed its yearly sales estimates on lower demand from the first quarter of 2012, hedge funder Whitney Tilson appeared for a guest segment on CNBC smiling as he said “vindication is sweet.”
Tilson revealed that his fund, T2 Partners, had been short Green Mountain Coffee since it was trading in the $80s per share. The stock is now trading at around $28.40 per share, after falling over 40% in after-market trading.
Tilson gave two reasons why he has been short Green Mountain for the last couple of years—first, the coffee seller faces rising competition; second, Tilson suspects the company is engaging in some questionable accounting methods, though he can’t prove it.
“I can’t prove it, but there are enough warning flags out there that they were stealing sales from future quarters in the last tew quarters to make their numbers look extra good and juice the stock,” he said. “But what happens when you steal sales from future quarters is that those future quarters eventually eventually catch up to you and we think we’re seeing the first of what will be a series of big misses for the company.”
“When you’ve got a company that you think has got fundamental competitive problems and maybe accounting problems on top of it…., there can be no bottom on these,” he added.