Bloomberg News

Diamond Foods Gains After CNBC Says Einhorn May Have Stake

December 30, 2011

(Updates shares in second paragraph.)

Dec. 29 (Bloomberg) -- Diamond Foods Inc. rose after CNBC reported that hedge-fund manager David Einhorn may have taken a stake in the snack maker, citing speculation.

Diamond, based in San Francisco, advanced 7.2 percent to $31.51 at the close in New York. The shares have declined 41 percent this year.

Jonathan Gasthalter, a spokesman for Einhorn, declined to comment. Stephen Sibert, a spokesman for Diamond Foods, didn’t respond to a voice mail and an e-mail seeking comment.

Diamond is undergoing an internal and U.S. Securities and Exchange Commission investigation into whether it violated accounting rules. Last month, the company said the internal probe would delay its purchase of Pringles potato chips from Procter & Gamble Co. in a deal valued at $2.35 billion.

Speculation that Einhorn, the president of Greenlight Capital Inc., will invest in Diamond with an accounting probe going on is “counterintuitive,” Louis Meyer, an analyst at Oscar Gruss & Son Inc. in New York, said in a phone interview.

The shares surged 53 percent on Dec. 9 after an analyst at KeyBanc Capital Markets Inc. said the investigation would conclude quickly and wouldn’t jeopardize the acquisition.

--With assistance from Matthew Boyle in London. Editors: James Callan, Jeffrey Tannenbaum

To contact the reporters on this story: Ashley Lutz in New York at alutz8@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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