The Wall Street Journal
on renowned hedge funder David Einhorn yesterday. Einhorn is the
43-year-old manager of Greenlight Capital, and he wields a
tremendous amount of power on Wall Street these days.
Any time Einhorn badmouths or even questions a company he
feels has a murky future, the stock immediately gets hammered.
Green Mountain Coffee Roasters
So that got me thinking: With the Value Investing Congress
coming up in two weeks, which stock will be getting the Einhorn
Einhorn is a member of the Investing Congress' so-called
"faculty", which means he presents investment ideas at the
organization's annual get-together in New York. This year's event
will be held October 1-2.
attended last year's Investing Congress and was sitting in the
audience when Einhorn essentially gave Vermont's own Green
Mountain Coffee Roasters the death sentence.
Einhorn gave a 45-minute, 100-slide PowerPoint presentation
outlining his concerns about the future of Green Mountain's
business. Those included an ongoing SEC inquiry into the
company's accounting practices, the expiring patents on its
market-dominating K-Cups, its negative cash flow, and its
unsustainable capital spending.
Within hours of Einhorn's presentation, GMCR shares had fallen
10%. Before Einhorn's presentation, GMCR shares were trading
around $92. Today, 11 months later, they're trading for just over
$30. Almost all of Einhorn's concerns about the company have come
noted, Green Mountain is far from Einhorn's only victim of late.
He recently called into question the sales practices at
. Within a day, the stock had fallen 20%.
That's nothing new. According to
nine companies saw their stocks plummet after Einhorn made
negative comments about them. Their median declines were 4.9%
within one day and 13% within a month.
Einhorn's praise has had the reverse effect on certain stocks.
got a 1% bump after Einhorn predicted the company might be headed
for a $1 trillion valuation.
But the move is more pronounced when Einhorn's comments are
negative than when he's positive.
Last year Green Mountain Coffee Roasters felt Einhorn's wrath.
With the Value Investing Congress right around the corner,
chances are he'll have concerns about another seemingly thriving
company come early October.
Be prepared for when he does. His next "victim" could be a
stock you own.