Was Green Mountain Coffee Roasters Too Hot for Einhorn?
“Our coffee was too hot, our apple was bruised, and our iron supplements didn’t go down smoothly,” wrote David Einhorn to shareholders on January 22, describing Greenlight Capital’s fourth-quarter results.
Even compared to Apple’s (NASDAQ:AAPL) slide and a bearish bet on the iron ore supply, his stance on Green Mountain Coffee Roasters (NASDAQ:GMCR) turned out to be a particularly bad one. In the letter, Einhorn acknowledged that his short position in the company wrecked the hedge fund’s portfolio return for the fourth quarter.
“The losses in the short portfolio were broad based; while the S&P 500 was down modestly in the quarter, our average short rose about 10%,” he said. “Green Mountain Coffee Roasters was the worst offender, with a 74% advance that wiped out our 2012 profits on the position.”
After his admission was made public, shares of the coffee company rose approximately 6 percent, as his error indicated that the company was better positioned that Einhorn had thought. Shortly after 2 p.m. Easter Standard Time, the stock was trading at $43.53…