SAC, Tiger Cut Holdings in Green Mountain Coffee

By Steve Eder

The Wall Street Journal

November 15, 2011

In the months before hedge fund manager David Einhorn took a bat to Green Mountain Coffee Roasters, high-profile investors, including some prominent hedge fund managers, were busy locking in profits and trading in and out of the then high-flying stock.

Chief among them was Steven Cohen’s SAC Capital. SAC sold off about 400,000 shares of Green Mountain during the third quarter, slashing its holdings by 42%, according to a regulatory filing on Monday. Cohen has reduced its shares over the past two quarters, ending the first quarter with 1.8 million shares, before reducing the total to 1 million at end of the second quarter, and 630,000 at close of the third quarter.

Green Mountain was among the best performing stocks of the year through the first three quarters, with its shares more than doubling. But on Oct. 17, Einhorn, famous for his clash with Lehman Brothers before its collapse, took the stage at the Value Investing Congress in New York and made his case for shorting Green Mountain in a 110-slide presentation. He criticized the company’s accounting and business practices.

Green Mountain’s shares, which were trading for about $90, fell immediately and have continued to tumble, falling to around $40  last week after the company’s third quarter sales fell short of analyst expectations.

Before Mr. Einhorn’s remarks, many investors were busy trading the company’s shares, which had surged in value during the first part of the year, Capital IQ data shows. One hedge fund that reduced its stake was Tiger Management Corp. Tiger held about 450,000 shares at the end of the third quarter, 30% less than it held at the end of the second quarter.

Two hedge funds who have been in the stock, JAT Capital Management and Coatue Capital, trimmed their positions slightly in the third quarter.

Others appeared to have been stuck on the wrong-side of the Green Mountain bet, more than doubling their investments during the third quarter.

Columbia Management Investment Advisers increased its shares from 2 million to 5.2 million during the third quarter and Jennison Associates increased it stake from 2.2 million shares to 4.5 million shares. Both are now among the largest holders of Green Mountain.

Its largest shareholder, Fidelity, added 1% to its holdings.