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Exclusive: An Inside Look at David Einhorn's "Big Short"

December 20, 2011 | About:
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gurufocus

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Hedge fund manager David Einhorn is taking an even harder line against Green Mountain Coffee Roasters (GMCR), his big short trade, claiming a recent audit committee review of the accounting issues he flagged is nothing more than a "whitewash."

In an exclusive interview with Reuters, Einhorn said he still doubts sales figures and spending plans at the company, which saw its stock soar to $110 in August on the rapid growth of its individual coffee servings or K-cups. When Einhorn revealed in October that he had been building a short position in shares of the company for weeks, the stock tanked and it effectively turned things around for his $8 billion Greenlight Capital fund this year.

"I think everything we said in the presentation is right now as it was then -- and in many cases even more so," said the 43-year-old manager, who runs one of $2 trillion hedge fund industry's better-known long/short funds and also is an accomplished poker player.

In the interview with Reuters, Einhorn blasted the company's audit committee for conducting a "whitewash" review of the concerns he raised in an October 17 presentation entitled, "GAAP-uccino." That presentation hit Green Mountain like a tidal wave, and has sliced the stock's value in half to around $46 as of Tuesday trading.

Einhorn's presentation seemed prescient and awoke traders to potential problems with Green Mountain's growth story. Green Mountain reported a massive earnings disappointment in November in another blow to investor confidence. The stock, which had been a favorite of many in the hedge fund set -- most notably John Thaler's JAT Capital -- now ranks as a popular short for managers.

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gurufocus
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Comments

PHILCIR
PHILCIR - 2 years ago
Einhorn had another medicore year...He's trying to talk down a stock where he gave back some paper profits after a big drop. Now its in the nether zone so he's trying to put on a full court press before the stock decides to go back up w/ him short. I believe he's gonna get his a$$ handed to him on this one, and I'm looking to buy on a break out about $60 w/ a $80 - $100. a little good news won't hurt either (after Im in of course). I'll ride it up as the shorts are forced to panic and i'll try to cover on the jujitsu spike.

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