Diamond Foods, Inc. (NASDAQ:DMND)
CAPS Rating:
A food company deals in processing, marketing and distributing culinary, in-shell and ingredient nuts and snack products.
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A food company deals in processing, marketing and distributing culinary, in-shell and ingredient nuts and snack products.
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A staggering 75% of Diamond's float was sold short as of mod-November, but share prices have fallen another 15% since then. It's reasonable to expect that a few short-sellers are taking profits here, boosting the analyst effect a bit further. An accounting scandal involving payments to walnut growers has brought on a flurry of shareholder lawsuits, internal audits, and other investigations, slicing share prices in half since late October. Those shorts are bound to cover their bets at some point. If you think the worst is over, this could be a terrific buy-in point.
Excellent call on the short float. It's becoming one of my favorite metrics in this period of volitility. You'd have to be "nuts" to ignore it!
This negative accounting issue will soon pass; probably by the end of the March 2012 quarter. The stock will recover accordingly.
Kahuna, CFA
Investment Professional
1974 - Present
What's a reasonable recovery for a stock that was only rising because it was a pretend growth stock financing its rollup strategy via a reputation built on cooked books?
Hey kahunacfa
ta2122, PHD
ta2122, MD
ta2122, NBC (NoBody Cares..........)
Great question, Seth. That 75% short-selling cohort should be happy today. I'll let the knee-jerk play out before closing this CAPScall in the red, but I really can't say how deep it'll stay. Who knew that walnuts could be so toxic to investors?