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Posts Tagged ‘Green Mountain Coffee Roasters’

Green Mountain Coffee Roasters: Calling a Bean, a Bean

To Err is Human, To Disclose Divine.

Courtesy of Sam E. Antar with Ilene

Green Mountain Coffee Roasters (NASDAQ: GMCR) is currently under the scrutiny of the Securities and Exchange Commission (SEC) and is facing numerous class action lawsuits alleging securities fraud. In particular, plaintiffs are alleging false and misleading disclosures in violation of federal securities laws.

One troubling issue is that when Green Mountain initially disclosed an accounting error concerning its K-Cup margin percentages, it claimed that the error was “immaterial.” Material and immaterial errors are treated differently.  If an accounting error is immaterial, a public company is required to correct it by making a one-time cumulative adjustment to earnings in the latest quarter. If an accounting error is material, a public company is required to notify investors that its previous financial reports cannot be relied on and that it will restate its affected financial reports to correct that error.

Background

On Monday, September 20, 2010, the SEC notified Green Mountain Coffee Roasters that it was conducting an informal inquiry. It requested information concerning “revenue recognition practices and the Company’s relationship with one of its fulfillment vendors.” Eight days later, on September 28, 2010, Green Mountain surprised investors by disclosing news of the SEC inquiry in an 8-K filing. In that 8-K report, Green Mountain also disclosed that it discovered an "immaterial accounting error" affecting financial reports issued from 2007 to June 26, 2010:

In connection with the preparation of its financial results for its fourth fiscal quarter, the Company’s management discovered an immaterial accounting error relating to the margin percentage it had been using to eliminate the inter-company markup in its K-Cup inventory balance residing at its Keurig business unit. Management discovered that the gross margin percentage used to eliminate the inter-company markup resulted in a lower margin applied to the Keurig ending inventory balance effectively overstating consolidated inventory and understating cost of sales. Management determined that the accounting error arose during fiscal 2007 and analyzed the quantitative impact from that point forward to June 26, 2010.

As of June 26, 2010, there is a cumulative $7.6 million overstatement of pre-tax income. Net of tax, the cumulative error resulted in a $4.4 million overstatement of net income or a $0.03 cumulative impact on earnings


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Green Mountain Coffee Roasters, Time to Spill the Beans?

Going through the SEC filing and press releases by Green Mountain Coffee Roasters led Sam Antar to ask Green Mountain Coffee Roasters, Time to Spill the Beans? Specific dates would make a good first step. – Ilene 

Courtesy of Sam Antar, White Collar Fraud

To truly exonerate itself after the discovery of certain material violations of Generally Accepted Accounting Principles (GAAP), Green Mountain Coffee Roasters (NASDAQ: GMCR) needs to come clean with investors and disclose exactly when it found certain accounting errors. In addition, Green Mountain needs to provide clearer and more transparent disclosures to investors about the Securities and Exchange Commission (SEC) inquiry and the discovery of those errors.

Timing of certain disclosures

On Monday, September 20, 2010, the SEC notified Green Mountain Coffee Roasters that it was conducting an informal inquiry and requested it voluntarily submit information concerning “revenue recognition practices and the Company’s relationship with one of its fulfillment vendors.”

Eight days later, on September 28, 2010, Green Mountain surprised investors by disclosing news of the SEC inquiry in an 8-K filing with the SEC. In that same 8-K report, Green Mountain disclosed that it discovered an "immaterial accounting error" affecting financial reports issued from 2007 to 2010: 

In connection with the preparation of its financial results for its fourth fiscal quarter, the Company’s management discovered an immaterial accounting error relating to the margin percentage it had been using to eliminate the inter-company markup in its K-Cup inventory balance residing at its Keurig business unit. Management discovered that the gross margin percentage used to eliminate the inter-company markup resulted in a lower margin applied to the Keurig ending inventory balance effectively overstating consolidated inventory and understating cost of sales. Management determined that the accounting error arose during fiscal 2007 and analyzed the quantitative impact from that point forward to June 26, 2010.

As of June 26, 2010, there is a cumulative $7.6 million overstatement of pre-tax income. Net of tax, the cumulative error resulted in a $4.4 million overstatement of net income or a $0.03 cumulative impact on earnings per share.

After evaluating the quantitative and qualitative aspects of the error in accordance with applicable accounting literature, including Staff Accounting Bulletins published by the SEC, the Company, with the participation of the audit committee of the Board of Directors,


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Interesting Issues in Timing of Green Mountain Insider Stock Sales and Disclosure of SEC Inquiry

Interesting Issues in Timing of Green Mountain Insider Stock Sales and Disclosure of SEC Inquiry

Courtesy of Sam Antar at White Collar Fraud 

Interesting timing

On Monday, September 20, 2010, Green Mountain Coffee Roasters (NASDAQ: GMCR) was notified of a Securities and Exchange Commission informal inquiry and request for voluntary information concerning ìrevenue recognition practices and the Companyís relationship with one of its fulfillment vendors.î

On Tuesday, September 21, 2010, executive officer Michelle Stacy exercised 5,000 options and immediately sold her shares at $37 per share. Of the 5,000 shares bought and sold, options for 4,375 shares did not expire until November 3, 2018 and options for 625 shares did not expire until March 12, 2019. What was the urgency in exercising her options so soon?

After the stock market closed on September 28, 2010, Green Mountain finally disclosed the SEC inquiry to investors in an 8-K filing which included certain other material disclosures.

On September 29, 2010, Green Mountain stock dropped $5.95 per share to close at $31.06 per share, a 16.1% drop in market value that day.

According to the SEC:

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

Michelle Stacy will have to answer questions about the timing of her option exercise and simultaneous sale of stock after Green Mountain received notice of the SEC inquiry, but before the company disclosed it to investors. The SEC might want to find out if Stacy any prior knowledge of  the SEC inquiry when she sold her stock before it was disclosed to investors.

Will Stacy claim that even though she is among the five most highly-paid executive officers of the company and is President of its key Keurig business segment, that she did not know anything about the SEC inquiry and her sale of stock was a mere coincidence?

Green Mountain Coffee Roasters Code of Ethics

According to Green Mountainís Code of Ethics:

As a publicly traded company, GMCR is required to adhere to federal laws and regulations prohibiting the disclosure of "insider


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DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

Cup of espresso and cookie

By Scott Brown at Sabrient, and Ilene at Phil’s Stock World

Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelf

And your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and dark

One more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan

Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley.  How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking? 

The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and  simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.

There are many reasons that insiders may sell shares which have nothing to do with their perception of the company’s prospects or valuation.   However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company’s methods for accounting for revenues, it starts to look a bit more dark and mysterious.   It is worth noting that Keurig accounted for over half of GMCR revenue last year, so when the President of Keurig is selling, it is worth a further look.  When the SEC discloses an inquiry into the companies accounting it is…
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DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

Cup of espresso and cookie

By Scott Brown at Sabrient, and Ilene at Phil’s Stock World

Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelf

And your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and dark

One more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan

Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley.  How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking? 

The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and  simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.

There are many reasons that insiders may sell shares which have nothing to do with their perception of the company’s prospects or valuation.   However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company’s methods for accounting for revenues, it starts to look a bit more dark and mysterious.   It is worth noting that Keurig accounted for over half of GMCR revenue last year, so when the President of Keurig is selling, it is worth a further look.  When the SEC discloses an inquiry into the companies accounting…
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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Zero Hedge

Iceland's Bardarbunga Volcano Begins To Erupt, Ash Cloud Imminent After Aviation Warning Raised To "Red"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In April 2010, it was Iceland's unpronouncable Eyjafjallajokull volcano which erupted and forced more than 100,000 flights to be canceled on concern glass-like particles formed from lava could melt in aircraft engines and clog turbines.

A year later, in May 2011, ash from Iceland’s Grimsvotn volcano forced flight cancellations in Scotland, northern England and Germany leading to further lower "GDP  adjustments" across Europe which back then was in desperate need of a scapegoat for its then double-dip recession.

So in what may be good news for Europe once again, now teetering on the edge of a triple-dip recession (in the confines of Europe's ...



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Chart School

What the Baby Boomers turned Retirement Boomers mean for Growth, Jobs, Inflation and the Markets

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

More than a year ago, in spring of 2013, I wrote 2 posts about how the retirement wave of the Baby Boomer generation would result in much lower growth, but full employment (see US Economy: Below Stall Speed or Already Above Potential? and Forget the Jobless Recovery, Get Ready for the Full-Employed Recession). Though more and more economists now recognize that it is to a large extend this retirement wave that has led to a huge exit out of the labor force, measured by the falling labor ...



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Insider Scoop

UPDATE: Symmetry Medical to Sell OEM Solutions Business to Tecomet, Spinoff Surgical Unit

Courtesy of Benzinga.

Related SMA Symmetry Medical To Sell Business That Makes Up 80% Of Revenue US Stock Futures Signal Higher Start On Wall Street Mid-Market Report: Dealmaking on the Rise (Fox Business)

Tecomet Inc., a Genstar Capital portfolio company and precision contract manufacturer supporting the medical device and aerospace industries, today announced that it has signed a definitive agreement with Symmetry Medical Inc. (N...



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Phil's Favorites

Argentine peso hits record lows on increased uncertainty

Argentine peso hits record lows on increased uncertainty

Courtesy of SoberLook.com

Argentina is showing signs of stress, as the official exchange rate has the US dollar now quoted 8.4 pesos - a new record.

Chart shows USD appreciating against ARS (source: Investing.com)


The "parallel" exchange rate also hit a record, with the dollar quoted at 14 pesos - a 67% premium to the official rate. Note that before the first devaluation in 2002 (see this ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Option Review

CME Group Put Options Active

Options volume on the provider of futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals and alternative investment products is well above average on Thursday morning, due in large part to a sizable put spread initiated in the 19Sep’14 expiry contracts. Shares in CME Group (Ticker: CME) are up slightly on the day, trading 0.25% higher at $74.34 as of the time of this writing.

The largest trade on CME today appears to be a bear put spread in which roughly 1,500 of the 19Sep’14 74.0 strike puts were purchased at a premium of $1.44 each against the sale of the same number of t...



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Sabrient

Sector Detector: Bullish investors jockey for position as if the correction is over

Courtesy of Sabrient Systems and Gradient Analytics

As many investors enjoy the final weeks of summer, some optimistic bulls seem to be positioning themselves well ahead of Labor Day in anticipation of a fall rally. Indeed, last week’s action was impressive. After only a mere 4% correction, investors continued to brush off the disturbing violence both at home and abroad, and they took the minor pullback as their next buying opportunity. But was that really all the pullback we’re going to get this year? I doubt it. But I also believe that nothing short of a major Black Swan event can send this market into a deep correction.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then ...



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OpTrader

Swing trading portfolio - week of August 18th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The Stock World Weekly Newsletter is ready to go! View it here: Stock World Weekly. Just put in your user name and password, or take a free trial. 

 

#120692880 / gettyimages.com ...

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Market Shadows

Helen Davis Chaitman Reviews In Bed with Wall Street.

Author Helen Davis Chaitman is a nationally recognized litigator with a diverse trial practice in the areas of lender liability, bankruptcy, bank fraud, RICO, professional malpractice, trusts and estates, and white collar defense. In 1995, Ms. Chaitman was named one of the nation's top ten litigators by the National Law Journal for a jury verdict she obtained in an accountants' malpractice case. Ms. Chaitman is the author of The Law of Lender Liability (Warren, Gorham & Lamont 1990)... Since early 2009, Ms. Chaitman has been an outspoken advocate for investors in Bernard L. Madoff Investment Securities LLC (more here).

Helen Davis Chaitman Reviews In Bed with Wall Street. 

By Helen Davis Chaitman   

I confess: Larry D...



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Digital Currencies

BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

Courtesy of Reggie Middleton.

An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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