The following is from my friend who has a short position in GMCR:
These experts’ (crime fighters) many concerns sound as if they come straight out of a Harvard Business School
- Accounting/Fraud Issues: Overstating Revenue,Understating Expenses, Capitalizing Expenses, Channel Stuffing, etc. all to meet Wall Street Estimates
- Improper Conduct/Violation of Laws: Violations of Regulation FD, Insider Trading, Securities Fraud, Peculiar relationship with quasi-captive distributor, etc.
- Fundamental Problems: Zero cash flow since Keurig Acquisition, 100% dependent on external capital, Abysmal earnings quality, reliance on acquisitions to meet/beat expectations, Reduced/changing transparency of operating metrics, Patent expiration, etc.