David Einhorn, Greenlight Capital, MU, and … GMCR .

I have not been following the Micron Technology/Seeking Alpha/Greenlight Capital/David Einhorn drama closely. However, one specific statement written by Eli Hoffmann of SA (who I believe is nothing short of a gentleman and scholar) got my attention (as it pertains to Green Mountain Coffee Roasters “GMCR”) :

So why did they [Greenlight Capital] drop the case? It seems they were able to contact the author, who convinced Greenlight that he had built his thesis by joining the dots on publicly-available information.

Source: http://seekingalpha.com/article/2106353-seeking-alpha-and-david-einhorn-the-real-story

I do not know nor hold an opinion of the veracity of the above claim(s), though apparently Einhorn appears to http://seekingalpha.com/article/2106353-seeking-alpha-and-david-einhorn-the-real-story#comment-31860863 .

However, I do know this: I for one, correctly guessed that Greenlight Capital was short GMCR in 2011 (before Einhorn revealed it publicly in the Fall), based on my own “joining the dots on publicly-available information.” Here’s how I did it:

  • I was short GMCR and a few other stocks in 2011.
  • I read Greenlight Capital’s Q2 2011 letter to investors. http://www.gurufocus.com/images/pdf/Qlet2011-02.PDF
  • The last paragraph on page 3 got my attention: “the consumer cyclical short that hurt us most in the first quarter…”
  • I had felt Greenlight’s pain. Their description of this ‘consumer cyclical short’ was uncanny. I ‘felt’ and observed exactly what they were talking about.
  • A friend and I discussed the letter. We wondered which company Einhorn was referring to. I guessed GMCR. My friend guessed another company.

I had never discussed GMCR with Greenlight Capital, Einhorn, or any of their associates, affiliates, etc. GMCR eventually became my largest and most concentrated short position, ever, in my life when the stock was trading between 90-116/share in 2011. (it also ended up being my most profitable). I had shorted GMCR for many reasons, but my belief that Greenlight was short GMCR (as well as a few other factors) gave me the conviction to “go for the jugular”, and size with concentration.

When Gaapuccino came out in the Fall… I was in for a pleasant surprise, as well as validation of my belief Greenlight was short GMCR. Luck was on my side.

I do not know nor hold an opinion as to how ‘VALUABLE INSIGHTS’ discovered Greenlight was long, and/or interested in going long (and publicly disclosing) its MU long position, a la their GMCR short position. I for one, however, did not share my GMCR findings publicly… I only shared with my friend.

I guess what I’m getting at is: I sense plausibility re: ‘Valuable Insights’. Probability? No clue, as I do not know the facts. (nor do I care)

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