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Author: DCWD40 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 598  
Subject: Re: Chairman of GMCR - REMOVED - Stock violation Date: 5/9/2012 1:52 PM
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The board departures means little for GMCR. Yes, the founder and Chairman and one board member borrowed money against their GMCR shares. Their shares were pledged as collateral and, because the stock fell, they got margin calls. If this violates company policy I will let the board decide.

For now, there is no new blood at GMCR. And, it is new blood that I think the company needs to get the company's focus changed from spending money to making the company a cash cow.

Should the stock be down? When I started writing this, the stock was up $.20 so that isn't a problem at the moment. Is it a good investment? With an EV/EBITDA of 6.6-times, the market does not value every dollar of income with a lot of respect. Apple is cheap but it EV/EBITDA is 9.4-times. Good perception will lead to better metrics if GMCR can get its act together.

Net debt is currently $300 million. Trailing operating cash flow is $245 million. This is a company that could quickly have a golden balance sheet with the right team in place.

Two key patents expire in September. That does not change the fact that GMCR is the single cup coffee king through its brand deals -- and the GMCR brand of coffee is worth something too. Until I see the brand deals expiring and not being renewed, I'll probably hold. If I see new management that is focused on maintaining brand deals and reducing costs, I will probably add to my position.

W.D.
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