Monster Beverage Corp (MNST), The St. Joe Company (JOE), Chipotle Mexican Grill, Inc. (CMG): Einhorn Isn’t Always Right, You Know

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The Value Investing Congress is now less than two weeks away, and some traders are betting that Monster Beverage Corp (NASDAQ:MNST) will be David Einhorn’s next short target.

Shares of the energy drink maker tumbled 6% yesterday, just on the mere chance that the billionaire hedge fund investor will present a bearish thesis on Monster Beverage Corp (NASDAQ:MNST) during the annual investing conference.


What’s the big deal?

Well, if you’ve been following Einhorn’s presentations over the past few years, you would want to avoid — initially, at least — the stock that he singles out as overvalued every year.

1). Three years ago it was The St. Joe Company (NYSE:JOE). The stock slipped 10% the day that Einhorn called out the way that the company’s massive Florida real estate holdings are being overstated on its balance sheet.

2). A year later it was Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). The stock tumbled 10% the day that Einhorn knocked the Keurig company’s accounting practices. He also elevated fears of the K-Cup patent expirations that were a year away.

3). Last year his crosshairs were locked in on Chipotle Mexican Grill, Inc. (NYSE:CMG). A stiff valuation and intensifying competition from Taco Bell propelled his bearish argument on the burrito roller. Chipotle slipped 4% on the day.

Einhorn isn’t brief. The St. Joe Company (NYSE:JOE) presentation was 139 slides long! The negative sentiment also lingers. St. Joe shares went on to tumble another 10% the following day. Three trading sessions after roasting Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), that stock had fallen 24%. Chipotle Mexican Grill, Inc. (NYSE:CMG) stock closed 11% lower four days after Einhorn’s knock.

The damage got even worse for The St. Joe Company (NYSE:JOE) and Green Mountain, with those shares losing 38% and 74% of their value, respectively, a year after Einhorn’s presentations.

Chipotle Mexican Grill, Inc. (NYSE:CMG) will buck the trend. We’re not a year out just yet, but the stock is trading 28% higher at the moment.

Company Date of Einhorn’s Presentation Prior Close A Year Later Now
St. Joe Oct. 13, 2010 $24.54 $15.30 $19.53
Green Mountain Oct. 17, 2011 $92.09 $23.66 $85.16
Chipotle Oct. 2, 2012 $316.13 N/A $404.90

Source: Yahoo! Finance.

Is Einhorn really about to rip into Monster Beverage Corp (NASDAQ:MNST)? It wouldn’t be a surprise if he did. It has many of the same characteristics that drew him to Green Mountain and Chipotle Mexican Grill, Inc. (NYSE:CMG) as short candidates. All three are consumer-facing stocks that seem to trade at lofty earnings multiples.

Monster Beverage Corp (NASDAQ:MNST) is currently trading at 22 times next year’s projected earnings, a ratio that is roughly double its current growth rate.

The three consumer stocks also have — or at least had — looming events that could prove problematic. Green Mountain had the K-Cup patent expirations taking place 11 months after Einhorn’s presentation. Chipotle Mexican Grill, Inc. (NYSE:CMG) faced the expansion perils of saturating established markets and reawakened competition.

Monster Beverage Corp (NASDAQ:MNST)’s shot could be regulatory agencies cracking down on the consumption of energy drinks, particularly by children and teens.

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