GMCR

So I’m afraid to short this stock out right. But the put options on it are REALLY expensive. It would seem there is little faith in this valuation.
This kind of makes sense. Either this thing is gonna end up eating SBUX lunch (because this is the only way I can see it growing) or its gonna eat it next year when its patent expires, it is no longer the new hot appliance: e.g. geoge foreman grill, or when this recession goes nuclear and it’s enormous P/E becomes a big old anchor.
Right now the premium you pay for time on put options makes this a tough one for me to want to short. This thing could easily have a great 4th quarter what with christmas coming up and god knows what. But I really think this will be a fantastic short at some point in the next 12 months.
 
Sounds like you’re trying to fit a square peg in a round hole. Why bother with this stock at all? It’s a market leader that makes an awesome product. Just because it’s expensive doesn’t make it a good short.
If you’re dead set on shorting a momentum play, I’d look to CMG.
 
Maybe it is because I am not a coffee drinker. I just don’t get it.
I am in need of decent shorts as a bunch of my shorts have just tanked (MTL, NFLX, RIMM) and I’ve covered them or am I rebalancing my portfolio.
Why do you like shorting Chipotle vs GMRC? I think I like Chipotle better than GMRC
Market cap of Chipotle is 10b vs 15b for GMRC
P/E is only 55 compared to 100
Chipotle makes a decent experience and bridges casual dining and fast food well - something that I think will grow.
Chipotle can expand. Last time I was in the US they were only in major metro areas. But for all I know they are everywhere now. They can eat right into Taco Bell and Chilis and all these other companies.
GMRC sells a coffee machine that will be replicated and copied easily. It’s patent will expire soon and it will be up to them to push their brand.
I don’t see this product working culturally in Europe: the solitary cup of coffee does not gel well with the Café culture. It is probably too expensive for Asia - sure american yuppies will pay for this, but that is only because SBUX is just amazingly expensive.
Oh, and one more thing. This company has some interesting accounting issues. That may just be as a result of being hippies from VT who were never that financially inclined, or it could mean something else.
In any case. I’m probably wrong about this one. But, even if I am right, I think there is plenty of time before this thing goes NFLX
I appreciate any thoughts guys. Thanks to those of you, especially Bromion for opining.
 
LVB does look like a great short doesn’t it? The market cap isn’t enormous though. This stock needs to go private doesn’t it?
 
I’m not short anything at the moment, though if I had to be all the names would be financials - BAC, BNP, SocGen, and Credit Ag. But all those are subject to amazing short squeezes in the near term, so I’m not bothering.
I like Chipotle, their soft tacos are great. And, just like GMCR and NFLX (going back in time two weeks), they’re seeing massive flows from momentum investors. Nothing matters but margin expansion, and accelerating revenue and earnings. As soon as one of those metrics breaks all the momentum money will go elsewhere.
I don’t like being short momentum stocks in general because they can go on forever (AAPL). But, if I had to pick one then it’d be CMG. And, actually, it has to do with QE3. QE3 will be great for nearly every stock shortly after it’s announced, but six months from now when we see commodity prices skyrocket again, those companies that count food as their main input cost are going to get squeezed. Once the margins contract, CMG will tumble 20% in a day. Not sure which quarter it will be, and until then it will continue to go up, but it’ll happen. It’ll happen to GMCR too, but I think CMG will come first.
 
ChickenTikka Wrote:
——————————————————-
> LVB does look like a great short doesn’t it? The
> market cap isn’t enormous though. This stock
> needs to go private doesn’t it?
True, it doesnt have much room to go down, but with Eurozone suffering, dont know who’s going to buy this stuff, plus, they’ve regularly issued stock over the past few years, can’t be good.
 
A popular short for the last few years has been LULU, you can also jump on that bandwagon.
 
Ok, I’m shorting this beast now. Using short term out of the money puts. (October 22nd $100)
Let’s party!
 
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