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Diamond Foods' (DMND -0.5%) continues to be haunted by questionable accounting practices forced...

Diamond Foods' (DMND -0.5%) continues to be haunted by questionable accounting practices forced the resignation of its CEO and CFO, and killed its potential acquisition of Pringles, as it receives a notice of non-compliance from Nasdaq as it failed to file its FQ2 results. And the SEC also has put DMND on notice that it's planning an investigation.
Comments (2)
  • boechat1
    , contributor
    Comments (31) | Send Message
     
    DMND is very cheap and is inherently a very good business The board will impose a new established growth mandate re-negotiate debt
    stick to it's knitting and sell at 40 within 2 years.
    20 Mar 2012, 06:49 PM Reply Like
  • WalnutMan
    , contributor
    Comments (119) | Send Message
     
    DMND is cheap for a reason. This "inherently good business" as you call it does not perform as well as its perception. Remember that they have massively inflated their profits according to their own admissions. On top of that, they have some severe issues with their growers leaving.

     

    We heard a similar report recently that caused DMND's stock to shoot up and it was that David Einhorn took a stake in them. When the truth came out, he didn't buy any of their stock but simply closed his short position.

     

    One can establish a growth mandate, but that doesn't always happen. I am going to drop 20 pounds, get in shape and get promoted at work. People say it all the time but that doesn't mean it will happen.

     

    Notice their last statement - Their walnut sales were up 7% and they gained market share on Emerald, Kettle and Pop Secret. Sound positive, yes? Later, they mentioned that walnut prices were up 35%. If prices are up 35% and sales are up 7%, that doesn't sound so hot. How much market share did they gain? Well, if they gained ANY market share, they would have stated they gained market share on Diamond's walnut brand but they didn't. Instead, they give a misleading statement that sounds positive but really is just gold plating a turd. They lost market share in their core business.

     

    Their situation was dire enough that those on the inside saw a need to pay a 250% bonus to their people to get them to stay. The dividend is gone. Their massive debt is now 0.75% more expensive than it was a week ago, not to mention the 0.25% one time penalty. All this negative news hit THIS year. Before that happened, they lost roughly 40% of their growers in one season. A large percentage of their growers have their contracts up for renewal this year and Diamond's situation and outlook certainly hasn't improved since the previous season.
    22 Mar 2012, 02:26 PM Reply Like
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