Bloomberg News

Hedge-Fund Manager Tilson Shorting Green Mountain on Competition

October 25, 2013

Hedge-fund manager Whitney Tilson, who runs Kase Capital, is maintaining his short position on Green Mountain Coffee Roasters Inc.

“It’s blindingly obvious that the competition (GMCR:US) is emerging,” Tilson said today in a telephone interview. Green Mountain is losing market share, “and I see that continuing,” he said.

“It takes time for the competition to actually ramp up their production, begin to get more shelf space and then for it to appear in Green Mountain’s numbers,” he said. “In the meantime, Green Mountain can give any guidance it wants.”

More sellers of private-label capsules that fit into Keurig machines have been emerging. Whole Foods Market Inc. (WFM:US) in September started selling a line of organic single-serve pods, and Safeway Inc. (SWY:US) and Kroger Co. also have introduced their own brands of coffee capsules. Waterbury, Vermont-based Green Mountain in August said its third-quarter sales rose 11 percent, the slowest quarterly growth in more than a decade, according to data compiled by Bloomberg.

Suzanne DuLong, a Green Mountain spokeswoman, didn’t immediately return a phone call and e-mail seeking comment.

Tilson in September named Green Mountain as one of his favorite shorts, along with Herbalife Ltd. (HLF:US), World Acceptance Corp. and InterOil Corp. (IOC:US) Shorting involves selling borrowed securities, wagering that their prices will fall.

While Green Mountain shares have more than doubled in the past year, they fell 13 percent in September after a report showed K-Cup sales growth slowed during the month, and SunTrust Banks Inc. analyst William Chappell cut his rating on the stock. This month, two more analysts have lowered their recommendations. The Standard & Poor’s 500 Index gained 3 percent in September.

Green Mountain fell 1.9 percent to $61.78 at the close in New York.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

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


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Companies Mentioned

  • GMCR
    (Keurig Green Mountain Inc)
    • $121.0 USD
    • -0.04
    • -0.03%
  • WFM
    (Whole Foods Market Inc)
    • $37.33 USD
    • 0.48
    • 1.29%
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