There are many stocks that never hit their bottom to give investors the opportunity that David Einhorn has given us. As investors we sit back in our chairs, look at graphs, dissect numbers, and make decisions all the time but very seldom do we get a chance like this. To buy a stock so low and so weak, yet so big and so strong, is a no brainer for a risk adverse investor.
When Stiller fell off of his chair a few months ago, his company's stock followed, but what has changed? The market knew the patent would expire, the market knew the history of accounting struggles, and the market knew that the growth forecasts would be put to the test. One man comes along with a reputation of successful short selling and puts this all in a power point and now we sit in our chairs laughing.
Here are the facts, a slow pressure brewer is a very complex machine that uses chemical reactions to create a wide variety of drinks for consumers. The raw materials and expertise that go into a Keurig Brewer are over three times the price a consumer pays for one. This is a major barrier to entry when the patent runs out. Even if there are entrants that are able to compete with the price or tap a new market, the stock price has already over compensated for this possibility.
Also has anyone other than the few noticed the management changes within this company. Back in May they brought in an expert in global logistics and sourcing to join the team in Vermont. As an investor, this means they are serious about taking over the town of espresso with K-Cups which according to consumer reports will be successful in Europe and Asia.
Finally, when I heard that Green Mountain fell short of growth projections my initial instinct said that is great news because now they will get back to marketing which got cut down on as they gained more B2B market share. Commercials are back in business now and the consumer market is being blown out of the water.
So thank you Einhorn, thank you Stiller, and thank you for selling short because this is an incredibly undervalued growth company as a result. When I take a trip to Europe because of you, I will go to my hotel lobby put a K-cup in the Keurig and sip on some tea because this company is ready to take their incredible product global.