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Fidelity Loses Nearly Half A Billion On Green Mountain Implosion

Tyler Durden's picture




 

Fidelity is happy to announce it has an opening for a new consumer discretionary analyst, because the current one, the one who recommended the firm's investment in Green Mountain, is now looking for a job. Fidelity's GMCR position , which as of 3:59 pm amounted to $1.13 billion, was minutes later trimmed by $445 million, after the company finally posted earnings (and we use the term loosely) which may have finally validated the David Einhorn (and every single skeptic's before) thesis on the name. Because while the earnings themselves came in line, it was the forecast that buried the company: specifically, its forecast of $885 million in Q2 revenue on expectations of $971.7 million, $3.92 -$4.05 billion in full year revenue on estimates of $4.32-$4.46 billion, as well as its 2012 EPS which were forecast to come at $2.40-$2.50 while the street was looking for 2.631 EPS. The result: the growth thesis is now over, and the growth premium has collapsed, with the stock plunging by 40% after hours.

Below are all the other funds which will likely be on the lookout for a new "coffee" analyst:

And while Whitney Tilson professes to being short on CNBC, it appears the reality is that he has 100 shares of GMCR long, which he bought in Q4.... Nothing like a little Schrodinger Tilson.

 

 

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Wed, 05/02/2012 - 17:09 | 2392207 slackrabbit
slackrabbit's picture

Jim Chanos is vindicated again

Wed, 05/02/2012 - 17:11 | 2392215 maxmad
maxmad's picture

Looks like don't "follow the green line!"  or the Green Mountain!

Wed, 05/02/2012 - 17:20 | 2392251 Careless Whisper
Careless Whisper's picture

I'll give props to anyone who was able to hold a short in green mountain. That stock moves like kingda ka at six flags. The trade for now is to probably buy the open tomorrow and keep a tight stop loss. Alot of shorts may want to take profits and cover tomorrow. Who knows.

 

Wed, 05/02/2012 - 17:42 | 2392310 Rockmann
Rockmann's picture

Buy the open? into those bailing due to margin calls and fund selling? 

Wed, 05/02/2012 - 17:59 | 2392345 Muppet Pimp
Muppet Pimp's picture

SSDD

Wed, 05/02/2012 - 19:45 | 2392526 Careless Whisper
Careless Whisper's picture

@ Rockman

yup. buy the open.

scared money never wins.

 

Wed, 05/02/2012 - 20:02 | 2392556 zaphod
zaphod's picture

Whatever, $445M is what? 8 hours of FED/Treasury debt money creation.

These guys create a billion dollar everyday out of thin air, what should they care if they lose half a bil?

Wed, 05/02/2012 - 22:03 | 2392784 Thomas
Thomas's picture

Comment omitted

Thu, 05/03/2012 - 08:17 | 2393294 ndotken
ndotken's picture

"Buy when everyone else is selling ... sell when everyone else is buying" ... those people, including me <smile>, that bought in the low $28's have already made 7.5% overnight on their investment

Wed, 05/02/2012 - 18:39 | 2392421 whatsinaname
whatsinaname's picture

I lost money trying to short this possum.

Timing..very poor !!

Good to see it go red though.

Wed, 05/02/2012 - 17:27 | 2392272 Rainman
Rainman's picture

Looks like Larry " 0ne hundred percenter " Fink took a beating too. Condolences.

Wed, 05/02/2012 - 17:36 | 2392291 ihedgemyhedges
ihedgemyhedges's picture

I really don't see what the problem is.  Now, Fidelity's value fund can buy it.................................

Wed, 05/02/2012 - 22:24 | 2392819 Buck Johnson
Buck Johnson's picture

Herb Greenfield of CNBC is having a crazy day today. 

Wed, 05/02/2012 - 23:10 | 2392879 lamont cranston
lamont cranston's picture

ADMIT TO BEING THE STOOOPIDEST PERSON ON ZH. WHAT THE HELL DID FIEDDELTIE  THEY MAKE/SELL? GOOD FOR FIDELTIE PRODUCING, WHICH IS WHAT ARCHIE BUMKER CALLED DEM

Thu, 05/03/2012 - 07:10 | 2393238 lamont cranston
lamont cranston's picture

Ah yes, The Fiddletie Bank. Did it become TBTF? 

Thu, 05/03/2012 - 00:34 | 2393007 misterbear
misterbear's picture

Dryadresearch.com had been bearish on this and seemed like they had called out the channel stuffing of the SBUX cups.  Company was a pile.  My best short thanks to these guys.

Wed, 05/02/2012 - 17:11 | 2392212 Let them eat iPads
Let them eat iPads's picture

Good to the last DROP.

Wed, 05/02/2012 - 17:10 | 2392213 AL_SWEARENGEN
AL_SWEARENGEN's picture

Wasn't Greenspan just saying that stocks were cheap?  How did he know?

Wed, 05/02/2012 - 18:37 | 2392415 Saro
Saro's picture

Not enough "cocksuckers" in this post.

Wed, 05/02/2012 - 17:11 | 2392214 Lost Wages
Lost Wages's picture

My wife's 401K is held by Fidelity. Is it going to vaporize now?

Wed, 05/02/2012 - 17:12 | 2392226 junkyardjack
junkyardjack's picture

They are transfering over her funds to help keep the company afloat.  Don't worry though the money is safe, they are going to make it back on some great opportunities out in Europe...

Wed, 05/02/2012 - 17:16 | 2392239 Golden monkey
Golden monkey's picture

Your dick. Fidelity that can be trusted.

Wed, 05/02/2012 - 17:20 | 2392249 Cruel Aid
Cruel Aid's picture

Doesn't mean you own it. You have a few choices, right?

Wed, 05/02/2012 - 17:31 | 2392281 Likstane
Likstane's picture

Your wife's and everyone else's 401k is really just vapor anyway.  Anyone still in paper will be rewarded with that vapor exchange soon enough. 

Wed, 05/02/2012 - 17:52 | 2392336 EclecticParrot
EclecticParrot's picture

I wouldn't worry, as the sad thing is -- if I've done the math correctly -- $450 million is a drop in the bucket of their $1.36 Trillion (yep, that's with a "T") under management, less than 0.03%, so while it looks like the commissary at their Boston headquarters just got stuck with a 4-year supply of blueberry hazelnut k-cups, the impact is similar to Soros dropping a mug on the linoleum -- which is precisely why they don't give a shit. 

Like most money (mis)managers, they intentionally make contrarian "calls" on high profile, CNBC-discussed stocks so that, in the rare event they're correct, they get free guest spots on Fast Money for 6 months to self-congratulate and plug their firm.  Sons-of-bitches.

Wed, 05/02/2012 - 17:11 | 2392217 youngman
youngman's picture

Well they will have Facebook to play with and hype in a couple of months now.....so off to bed kiddies....the momo play in this one is over...

Wed, 05/02/2012 - 17:11 | 2392218 mayhem_korner
mayhem_korner's picture

 

 

Them thar caffeine withdrawal symptoms might smart a bit.

Wed, 05/02/2012 - 17:11 | 2392221 max2205
max2205's picture

Coffee Bubble bursts....400 others to follow

Wed, 05/02/2012 - 17:20 | 2392247 midgetrannyporn
midgetrannyporn's picture

401 if you count gold.

Wed, 05/02/2012 - 20:10 | 2392567 Sam Clemons
Sam Clemons's picture

"Who could have seen this coming?"

Wed, 05/02/2012 - 17:19 | 2392225 Golden monkey
Golden monkey's picture

One year ago, I told the "roasters" that they will end up roasted soon enough.

Only the gold market was listening though. Paper is better than solid gold, dumbitchez.

Wed, 05/02/2012 - 17:13 | 2392231 max2205
max2205's picture

ah, I am pretty sure they are hedged...now for the unwind.

Wed, 05/02/2012 - 17:15 | 2392241 midgetrannyporn
midgetrannyporn's picture

Fidelity is almost as bad as CALpers. They'll buy anything. Every single one of their funds is crap.

Wed, 05/02/2012 - 17:17 | 2392245 Dr. Engali
Dr. Engali's picture

That's the problem with too much money. There is nothing good to put it to work in.

Wed, 05/02/2012 - 17:32 | 2392284 RopeADope
RopeADope's picture

Jesse Livermore would beg to differ. Too much money usually leads to plenty of places to put it to work at very attractive prices.

Wed, 05/02/2012 - 17:48 | 2392323 Henry Chinaski
Henry Chinaski's picture

Let me sleep on it.

Wed, 05/02/2012 - 17:16 | 2392242 Dr. Engali
Dr. Engali's picture

Ouch 40% that'll make your asshole pucker.

Wed, 05/02/2012 - 17:21 | 2392254 HarryM
HarryM's picture

They sure smacked that bitch with a shovel - seems excessive

Wed, 05/02/2012 - 17:32 | 2392285 Zymurguy
Zymurguy's picture

No I think the exact opposite... time to change yer shorts after that drop.

Wed, 05/02/2012 - 18:01 | 2392352 walküre
walküre's picture

Somebody waited for the report and SOLD. That's the point. Someone cashed in and used the report release as cover.

This will not be an isolated incident.

Wed, 05/02/2012 - 17:16 | 2392243 Conman
Conman's picture

Tisk tisk, no one listened to that crazy eddie guy. Rememebr reading his review of gmcr's financials and comparing it to crazy eddies operations.

Wed, 05/02/2012 - 17:21 | 2392255 BlueStreet
BlueStreet's picture

How many companies now sell k-kups, 10, 20 30.  All fidelity had to do was go to a store that sells coffee and just look at the shelves.  

 

 

Wed, 05/02/2012 - 17:30 | 2392275 I should be working
I should be working's picture

Yup with no customer loyalty and a product with no comparative advantage the growth story wasn't gonna last. Pretty soon SBUX and everybody else will be selling single serve coffee makers. But don't let that stop anyone on Wall St from extrapolating a trend.

But 40%, wow...

Wed, 05/02/2012 - 17:22 | 2392256 junkyardjack
junkyardjack's picture

Looks like they built most of their position in late 2010 and early 2011

Wed, 05/02/2012 - 17:23 | 2392262 I should be working
I should be working's picture

And again I think to myself: who buys this shit?

And the answer comes to me: some douche at Fidelity.

Must be tough losing other people's money.

Wed, 05/02/2012 - 17:29 | 2392274 midgetrannyporn
midgetrannyporn's picture

They get theirs no matter what. Check out their new building! gRAPINg people is the amurkin way!

Wed, 05/02/2012 - 17:37 | 2392295 fonzannoon
fonzannoon's picture

Which of their funds has a big position in gmcr? I did not see it in the top ten holdings of their consumer discretionary fund

 

Wed, 05/02/2012 - 17:47 | 2392321 junkyardjack
junkyardjack's picture

Its probably split across multiple funds, that's the manager level

Wed, 05/02/2012 - 17:37 | 2392297 ziggy59
ziggy59's picture

They've been decaffeinated

Wed, 05/02/2012 - 17:42 | 2392307 RopeADope
RopeADope's picture

This is what happens when management is not qualified to run a business and is unable to evolve into corporate leaders. They end up bringing in outsiders that are not vetted properly.

 

Check out GMCR Director Douglas Daft's previous encounter with the SEC on falsifying sales when he led Coca-Cola. Fortunately, he sits on Wal-Mart's board of directors as well so should be able to escape any criticism of enabling corporate wrongdoing as that company has such a stellar track record.

Wed, 05/02/2012 - 17:51 | 2392335 walküre
walküre's picture

Management has got nothing to do with this.

The stock was overbought and hyped up with Uncle Ben's unlimited cash put.

If you're trying to disqualify the management based on their revenues which came in pretty decent considering everything involved, than you might as well disqualify the whole lot.

Just wait.

Wed, 05/02/2012 - 18:48 | 2392439 RopeADope
RopeADope's picture

Yes...I am sure that management had nothing to do with stating that GMCR's target market was 90 million households when a  pareto analysis produced a more reasonable target market of 17 to 18 million MAX (14M with least cost effort). I am also certain that management believing that they could fund their expansion by capitalizing COGS for a long period of time because their target market was 90 Million also has nothing to do with the recent cashflow problem as GMCR approaches the 14M unit limit on easily obtainable brewer market.

And you are entirely right that Bernanke is 100% to blame for all corporate fraud that goes on in America. After all, forcing corporate executives to return shareholder paid-in capital after outright theft on their part is such a bad practice that we need to blame someone else.

 

You are also quite correct that management sheep are the same as management wolves-in-sheep-disguise if you meant to say that no corporate managment should ever be held accountable for their actions.

 

Did you mean to say...."Just wait, this time is different?"

Wed, 05/02/2012 - 22:13 | 2392802 walküre
walküre's picture

its forecast of $885 million in Q2 revenue on expectations of $971.7 million, $3.92 -$4.05 billion in full year revenue on estimates of $4.32-$4.46 billion, as well as its 2012 EPS which were forecast to come at $2.40-$2.50 while the street was looking for 2.631 EPS

You're making it sound like the company is a scam. Their revenue projection was off by 10%. Big deal. It's a projection. That doesn't amount to a 40% stock price correction unless someone cashed in their chips .. in the dark of the after hours.

Again, the management may not be stellar (who is?) but the company still generated 4 billion in revenues.

The stock was pumped up by Ben's funny money and the rigged HFT bull shit. Hence my conclusion that AMZN, CMG, GOOG and others are going to follow soon.

There is a much deeper message in this sell off.

Wed, 05/02/2012 - 22:33 | 2392833 RopeADope
RopeADope's picture

The blowup of this company has nothing to do with the Fed or HFT. And i guarantee you that I can sell $4B USD of iphones by buying them at 200 and reselling at 100 so any analysis based on revenue alone is meaningless.

I agree that the FED and HFT are serious problems but blaming these for everything creates an environment where criminals of another kind can point the finger at those hot issues and shift blame from themselves.

Wed, 05/02/2012 - 17:43 | 2392311 bob_dabolina
bob_dabolina's picture

oops.

Wed, 05/02/2012 - 17:44 | 2392314 Debtless
Debtless's picture

How anyone still plays this game is beyond me.

Wed, 05/02/2012 - 17:49 | 2392319 mrdenis
mrdenis's picture

GROWTH FUND OF AMERICA INC

6,269,956

 

Columbia Fds Ser Tr I-Columbia Select Large Cap Growth Fd

4,362,900

 

FIDELITY OTC PORTFOLIO

4,085,004

 

FIDELITY GROWTH COMPANY FUND

3,417,978

FIDELITY MID-CAP STOCK FUND

3,279,500

FIDELITY BLUE CHIP GROWTH FUND

3,260,765

Powershares Exhg Traded Fd Tr-Powershares QQQ Tr, Series 1

1,835,565

 

VANGUARD MID-CAP INDEX FUND

1,553,958

 

VANGUARD TOTAL STOCK MARKET INDEX FUND

1,552,026

FIDELITY MAGELLAN FUND INC                                                                         

1,216,000

Wed, 05/02/2012 - 17:48 | 2392322 connel20
connel20's picture

Aren't places like Fidelity just the holding company for investor's shares?  This isn't actually Fidelity's money...is it?

Wed, 05/02/2012 - 17:50 | 2392328 Tyler Durden
Tyler Durden's picture

Fidelity manages mutual funds which invest actively.

Wed, 05/02/2012 - 18:13 | 2392373 techstrategy
techstrategy's picture

Tyler, you could put a serious dent in the HFT/MOMO games if you created a thread to track the most manipulated MOMO names (maybe CMG which is on a 6 month linear rise) and engaged your readership to track/document BS moves, particularly HF algo / option scalping.  A little sunshine on a few of the most egregious plays might just help...   Just a thought...

Wed, 05/02/2012 - 19:36 | 2392512 connel20
connel20's picture

And isn't it just investor's money that is placed in the mutual funds?  The important distinction I am trying to make here is Fidelity losing money vs. investors losing money.  You can't argue with Fidelity and others terrible decision making with regards to where they place their money.  Who is actually losing money though is much more important to me.  Sure you can see long term effects like a loss in management fees and investors pulling out their money, but at this moment investors lost 40% and Fidelity lost a very small fraction of that.

Thu, 05/03/2012 - 00:28 | 2393001 Estrella
Estrella's picture

Uh oh. I think what is, laughingly, referred to as my "retirement" funds are with Fidelity. So...

Wed, 05/02/2012 - 17:48 | 2392325 walküre
walküre's picture

AND SO IT BEGINS

AMZN - CMG - AAPL - GOOG

OVERBOUGHT, OVERHYPED AND JUNK

Any more confirmation that the big boyz are cashing in their chips?

If you're still holding any of these at this price, YOU'RE DUMBER THAN DIRT.

HAHAHAHA. The hedgies are getting wedgies.

Thu, 05/03/2012 - 00:13 | 2392988 RmcAZ
RmcAZ's picture

Holy jesus, CMG has a $20B mkt cap

Wed, 05/02/2012 - 17:51 | 2392329 Henry Chinaski
Henry Chinaski's picture

"green" anything, just can't catch a break these days

green indusrty is an oxymoron

 

edit: ya, that's the vodka spelling :)

Wed, 05/02/2012 - 18:15 | 2392348 Yen Cross
Yen Cross's picture

 I was in Australia last month and picked up this little tidbit.

  This " Green Mountain " deal was stillborn from it's inception! It cannibalized Starbucks sales. I get the multi branding idea!

 The next time you indulge, think about this! Starbugs: Coffee chain Starbucks to stop using insects to colour food and drinks | News.com.au

Wed, 05/02/2012 - 18:01 | 2392349 Cult of Criminality
Cult of Criminality's picture

They could go long on the sugar daddy dating fund maybe

Wed, 05/02/2012 - 18:01 | 2392351 virgilcaine
virgilcaine's picture

One can get killed after hours in the mkt... how do I get in this Wall St casino.. looks like fun.

Wed, 05/02/2012 - 18:03 | 2392354 RonnyBoy67
RonnyBoy67's picture

Want to get CREAMed with your coffee?

Wed, 05/02/2012 - 18:06 | 2392360 techstrategy
techstrategy's picture

FMR is busy gambling billions more on CMG and LULU sporting multiples of 60+...  But, it doesn't matter because it isn't their money.  Never mind the MASSIVE insider selling in both companies in Q1.  But, it is the Growth Company way -- very tight control of float for algos to squeeze shorts and profit on puts from retail investors who still think fundamentals should or do matter.

Retail investors will not come back to the market until the MOMO growth manipulation ends.  Everyone knows it is crooked, even if the SEC never does anything about it...

Wed, 05/02/2012 - 18:13 | 2392372 Yen Cross
Yen Cross's picture

Momentum Growth? Are you kidding me?

Wed, 05/02/2012 - 18:19 | 2392387 techstrategy
techstrategy's picture

Folka on WS can continue to claim the market is cheap (which it is not if you take out the past 30 years of 401K net inflow induced multiple expansion which will now reverse) an infinitum.  When people like my parents hear about CMG or LULU at 60X and more, they know the market is rigged and will stay out, to the detriment of many companies that are just doing the good old fashioned work of creating and capturing value...  

I pisses me off because the market is now biased against true tech companies (bio, nano, semi) pursuing longer term but revolutionary technology.  Once upon a time, those are the kind of companies that FMR Growth funds would have owned.  Now it is f'in burrito and yoga joints.  And, you wonder why the US is losing its competitiveness... 

Wed, 05/02/2012 - 18:52 | 2392449 Yen Cross
Yen Cross's picture

 Re; Read your above post please? Then RSVP your thoughts. I wasn't disagreeing with you.

Wed, 05/02/2012 - 18:08 | 2392361 The game
The game's picture

WA HAPPON!

Wed, 05/02/2012 - 18:18 | 2392382 matt_chart
matt_chart's picture

Buy those dips! Well excpet this one..

 

Try this one instead! Use volume spikes to find bottoms!

Training Video: Stock Volume As Reverse Indicator http://stocklegends.com/technical-trading/stock-volume-as-reverse-indicator/

 

Wed, 05/02/2012 - 18:24 | 2392397 bahaar
bahaar's picture

Didn't GMCR tank some 6 months ago?  So it's tanked again. 

Wed, 05/02/2012 - 20:18 | 2392576 monopoly
monopoly's picture

And they want retail investors to put their money in the stock market. What a farce.

Wed, 05/02/2012 - 20:38 | 2392602 ThisIsBob
ThisIsBob's picture

This coffee tastes like dirt.

Well, it was ground this morning.

Wed, 05/02/2012 - 22:54 | 2392859 adr
adr's picture

GMCR just proves those who invest in corporations don't actually know anything about business. We have created nothing but a scam for wealthy insiders to steal money. Produce shit, hype it while borrowing money, leverage 1000x, cash out, and leave a rotting corpse behind.

Green Mountain's K-cup machines are pieces of garbage. A $10 Mr. Coffee Walmart special is built better. Most people who buy a Keurig machine are not stupid enough to buy another one after it breaks from three uses. The new $250 machine was probably produced for less than $5. I've never seen worse construction on a "premium" product.

The major revenue generator has als been killed off by the reusable K-cup insert that allows you to use your own coffee. Why pay over $.60 a cup for store bought crap when you can grind your own and use it in a single serve machine. The Tassimo machines are actually buil well and are far superior to Keurigs. The problem is Bosch is a well established company, unlike Green Mountain, and couldn't be algo gamed.

Keurigs are a fad just like bread makers in the '90s. Eventually people realize they are far more trouble than they are worth and just go back to what works. You can buy a quality single serve coffee maker for $20. Sure it isn't as easy but you save hundreds of dolars a month if you drink a lot of coffee.

The next to fall to a penny stock is Soda Stream. Guess what people found out. You can buy 5 gallons of Coca Cola syrup at Costco for $40 and use it with your SodaStream, if you were dumb enough to buy one of those as well. Hmm a pint of syrup for $8 that tastes like dirty dish water, or 5 gallons of Coke syrup for $40. What would you choose? Besides if home carbonators were going to be such a big business, don't you think Coke or Pepsi would enter the market and crush SODA?

Of course real market analysis is never done, becauze if any trader actually walked into a store they would probably never invest $1 in the stock market because they would see the blatant fraud first hand.

Wed, 05/02/2012 - 23:41 | 2392939 DrSandman
DrSandman's picture

Heh.  Up next -- the EPA is banning Soda Stream for the CO2, which, as every intelligent and sentinent non-denier knows -- causes OMG catastrophic global warming.  

Next, the EPA will crucify beer companies for the same sin.  

Your Guinness, however with its nitrogen bubbles, is safe from the EPA.

 

Disclosure: Long Diageo + 2 pints Guinness with dinner.

Wed, 05/02/2012 - 23:51 | 2392956 Non Passaran
Non Passaran's picture

Fucking government morons. The other day Bloomberg reported how they're cracking down on the happy hour in NYC (don't remember why, but they sure know). Fuck them.

Thu, 05/03/2012 - 06:02 | 2393195 cnhedge
cnhedge's picture

US Daily: 2012 US April Payroll Preview: Sluggish
http://www.cnhedge.com/thread-4078-1-1.html
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