Hedge fund star David Einhorn was on CNBC's "Fast Money: Halftime Report" with Scott Wapner a little while ago talking about a number of topics, including his persistent short selling of Green Mountain Coffee Roasters (GMCR).
Reuters The shares are up $9.44, over 15%, at $71.27, today, after it last night beat fiscal Q4 expectations, announced a new $1 billion share repurchase program, and projected this fiscal year's EPS higher than analysts have been modeling.
That, and the stock's 72% rise this year, haven't dented Einhorn's conviction in his negative view of the company's future, he told Wapner.
Einhorn contends there are "two ways to win" in betting against the roaster.
One is the funky fundamentals he's warned of. "We've had questions about the numbers, the way they've disclosed them, the capital spending, whether the revenues really are what they're saying," said Einhorn.
"But the other way to win, you don't really have to have the accounting firm blow up, you don't have to have the SEC investigate the numbers. Because the real problem they have is, this was theoretically a great razor and razor-blade business."
“But they've lost the patents on the K-Cup. Anybody can make these things. And now in the grocery store, more than a quarter of K-Cups sold have nothing to do with Green Mountain. We think there's going to be commoditziation, price competition."
When Wapner asked why the shares are so resistant to the negative argument, Einhorn responded "It's a very emotional stock," before resuming his critique, remarking "Now they want to increase their buybacks, they want to double their capital spending, which makes no sense to me."
"I think over time our thesis is playing out pretty much exactly as we hoped it would," said Einhorn.
Among his positive bets, Einhorn said he likes mattress maker Tempur Sealy International (TPX), given that it is in an industry that is consolidating, and he generally likes consolidation. He also had positive remarks about Apple (AAPL) and Micron Technology (MU), which are written up in a post on the Tech Trader Daily blog.
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