merger arb, event-driven guys: what do you think of Starbucks/Green Mountain today?
curious about your take because this out of my area of expertise
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Were you too lazy to look up GMCR?
hahaha yeah thanks man....heard about their 40% euphoric jump wtf
Yes, I watch that name very closely. GMCR's short interest is very high, this will only cause it to increase further. I think we will see a massive pull back in the next 8-10 months as GMCR gets closer to instilling their new pod and brewer system b/c of patent expiration.
I haven't looked at the market built today but would guess the surge was part of a short squeeze. Steve Cohen said he was long GMCR at ISI CEO Summit, I'm 99% sure that guy trades on info.
crazy, thanks man.
I have been a bear on the name but today really took me by surprise. Basically the name has traded up on spec that its a takeover candidate. There had been spec out that KFT or SBUX as a potential acquirer. The name is heavily shorted. I followed this story today literally from the second the press release came out. The fundamentals behind this is we will not see economic impact until the 4th quarter.
Shorts squeezed the hell out of this thing today and im not sure they have all covered. I am in touch with one of the biggest bears in the name and I dont believe they covered at all today. Needless to say the shorts simply got this one wrong. The short idea was that with their patents expiring they would need some sort of stream of revenue and with the sbux partnership it creates that value. This isnt a merger but a strategic partnership that is goign to benefit both companies. That being said I dont think it was worth a 40% increase.
I'm going short at this price, the patent expiration is a significant sell point for me. I don't think the buyout talk is very serious on this name. I think people are going to wait and see what happens with SLE and their coffee biz (really whole biz Meats being a good one) before they get into further packaged foods consolidation. RAH had a slight up tick today, I like that name moving forward with commodity prices surging and the main label producers being forced to choose less margins or lose share to private label foods...
The takeover spec is done... the partnership is real and its going to add value. I just dont think its going to add this much value. If the market gets weak and stays weak (meaning buy the fucking dip no longer is working) then this is a great short.
i follow macro trends but it's stories like these that make event-driven seem like so much fun
My aunt who knows absolutely nothing about investing, told me to buy SBUX back when it was at 15.00, looks like I should have taken my investment advice from a piano teacher.
I dunno, man. I heard a report that 80% of SBUX customers don't have a keurig yet. That's a lot of up-side
Who knows with that number, lets say 11000 SBUX stores selling 75-100 units for the first year and 25-60 thereafter. On top of that the per cup charge GMCR is making on SBUX.. I haven't modeled it yet but don't think it is more than a $0.10 EPS accretion. Remember the addition of SBUX will cannibalize some of the offerings already present in K-Cups....
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