Green Mountain Coffee Roasters (GMCR) wasn’t the only company David Einhorn of Greenlight Partners burnt during his presentation at the Value Investing Congress this week. Sodastream International Ltd (SODA) also fell flat on his comments.
David Einhorn’s Green Mountain Coffee Massacre
Before the Value Investing Congress, GMCR was up more than 180% on the year. Then, David Einhorn gave a 110-slide presentation at the conference that criticized GMCR. He talked about “accounting discrepancies,” quarterly results that look “too good to be true,” the company’s “merely adequate” return on capital and its runaway spending on developing a product that is priced out of the range of most households. Investors were listening. Shares in GMCR are now just 112% YTD after falling 15.39% after Einhorn’s presentation.
But David Einhorn Didn’t Discuss SodaStream…
No, he didn’t, but there was a lot of truth to his comments and investors followed suit. “Green Mountain is down following Einhorn’s comments and SodaStream is following the same sentiment,” explained Josef Schuster, founder of IPOX Schuster LLC. “These consumer type companies tend to trade together.” In other words, investors saw the logic behind Einhorn’s comments and they began to look at other investments in the same light. SODA falls into the same category. It is a luxury product, outside the price points for most homes. Its shares have fallen 6.71% since Monday, when Einhorn gave his presentation, bringing them 0.13% in the red YTD. Before the presentation, SODA share prices were reporting up 11.49% YTD.