Diamond Foods gets rid of CEO and CFO

[CONeal]

http://finance.yahoo.com/news/Diamond-Foods-names-new-CEO-apf-724295443.html?x=0

 

The audit committee came back with what most expected.  The payments to the growers were accounted for in the wrong period.  2 years of financials have to be restated.

 

  Kinda sounds like the Pringles deal is off as they can't afford it now.  Share price has taken a beating after hours and probably more to come over the next few months.  Might be interesting to look at if they can avoid bankruptcy. 

[BargainValueHunter]

I have trouble seeing the value here...

 

http://finance.yahoo.com/q/bs?s=DMND+Balance+Sheet&annual

 

I guess DMND could be worth maybe $15 per share but the walnut growers may decide to ship elsewhere which is a danger.

 

Does the company have any hidden assets?

[CONeal]

I haven't really started digging into the company to know if there are hidden assets.  Was pointing out that Diamond is up against a few headwinds that could in the end provide some value if they can avoid bankruptcy.  it maybe a good long or short idea whatever a person decides.

 

I have seen several comments saying the company is worth $15 a share.  Would not be surprised if it goes dramatically below that.  There are still some negative news to come out.  I think the merger will be called off, shareholder lawsuits, and they still haven't restated earnings.  If it only had to do with how expenses were booked in a couple of quarters it should be taking this long to restate.  All of this is with a low cash balance. 

[BargainValueHunter]

I haven't really started digging into the company to know if there are hidden assets.  Was pointing out that Diamond is up against a few headwinds that could in the end provide some value if they can avoid bankruptcy.  it maybe a good long or short idea whatever a person decides.

 

I have seen several comments saying the company is worth $15 a share.  Would not be surprised if it goes dramatically below that.  There are still some negative news to come out.  I think the merger will be called off, shareholder lawsuits, and they still haven't restated earnings.  If it only had to do with how expenses were booked in a couple of quarters it should be taking this long to restate.  All of this is with a low cash balance. 

 

You may be onto something...

 

http://blogs.wsj.com/marketbeat/2012/02/09/taking-a-bullish-flyer-on-diamond-foods/

 

While the most hotly traded options contracts were bearish puts that make money with a steep drop in the stock beyond Thursday’s deep plunge, there were opportunistic traders initiating many of those contracts as sales, analysts said. Those traders sold the contracts to collect the rich worry premium that followed the company’s grim news, the analysts added.

 

There were also buyers of much cheapened bullish call options that could deliver big profits should the stock snap back this month or next.

 

“Traders in call options are exhibiting ‘comeback kid-type’ behavior,” said Caitlin Duffy, equity options analyst at Interactive Brokers. “Today, you can definitely get these at a steep discount, given what happened overnight.”

 

The most heavily traded bullish contract on Diamond Foods’ stock were calls conveying the right to buy shares at $25 by mid-March. At a late Thursday price of $1.95, the call options start to profit if Diamond Foods’ shares surpass $26.95. In one sign of demand for those contracts, the late-session price was close to the day’s highs.

[BargainValueHunter]

Its getting a little more interesting now...

 

http://finance.yahoo.com/news/Diamond-Foods-worth-44-break-theflyonthewall-2691932330.html?x=0

 

KeyBanc said Diamond Food's FY11 earnings power is $1.80 in a worse case scenario and that fair value in a potential break-up is $44 per share. Shares are Hold rated.

 

http://www.thestreet.com/_yahoo/story/11410065/1/pringles-deal-may-pop-for-diamond-foods-analysts.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

 

"As for fair value, we believe DMND is worth $44 excluding Pringles in a break-up scenario based on our sum-of-the-parts valuation and worth $33 excluding Pringles, Walnut and Other Nuts," Jagdale wrote in a report.

[Guest Hester]

Not buying stocks that are currently restating earnings and are also under investigation by the SEC and the DOJ for accounting fraud is a pretty good investing strategy.

[alertmeipp]

Agree. Still waiting for Sino-forest to resume trading here.

[beerbaron]

Not buying stocks that are currently restating earnings and are also under investigation by the SEC and the DOJ for accounting fraud is a pretty good investing strategy.

 

That's the quote of the week IMO!

 

BeerBaron

[BargainValueHunter]

Not buying stocks that are currently restating earnings and are also under investigation by the SEC and the DOJ for accounting fraud is a pretty good investing strategy.

 

It doesn't cost me anything to look into ANY company's financial structure and situation to see if there is any value there in relation to the current price.

 

Even after they declare bankruptcy their may be value in their bonds.

 

I'll take a look at any company before applying capital to an investment.

 

When I first heard of Fairfax the headlines for the company were terrible. Yeah, a completely different situation but I am glad I didn't listen to the FFH bashers without taking a look first!  ;)

[oddballstocks]

I'd be wary of a situation like this, how much value was left for Olympus shareholders recently? 

 

I am willing to buy value anywhere but the type of culture that allows something like this to happen (trust me, it's not just two people) isn't the type of culture I want in a company I'm a partial owner of.  This is why it's useful to screen for aggressive accounting before investing, you generally avoid the types of characters who might play fast and loose.

[AZ_Value]

Not buying stocks that are currently restating earnings and are also under investigation by the SEC and the DOJ for accounting fraud is a pretty good investing strategy.

 

Lol... This right here is some Buffettesque advice!! Listen up kids...

[AZ_Value]

I'd be wary of a situation like this, how much value was left for Olympus shareholders recently? 

 

I am willing to buy value anywhere but the type of culture that allows something like this to happen (trust me, it's not just two people) isn't the type of culture I want in a company I'm a partial owner of.  This is why it's useful to screen for aggressive accounting before investing, you generally avoid the types of characters who might play fast and loose.

I agree.

 

I looked at this briefly. Catching falling knives can be an interesting exercise, as long as you try to catch paper knives, and not butcher knives that are still 1/2 way through their fall, but it is hard to get it right.

 

I would not touch this either for the simple reason that this whole mess touches straight to the core of their business. Actually, buying nuts from growers and selling them to us IS their business! So these funky payments made to growers are as big a red flag as you could ever get.

 

For Olympus, investment losses that happened in the 1990's really had no direct relation to the fact that they control 70-80% of the endoscope market in the world today.

I did buy Olympus and made a pretty awesome gain, not because I was comfortable with the company, but because I do believe like Ben Graham said that there is a price at which almost any asset is a buy (or a sell for that matter), hell there is even a price at which I would probably buy RIMM.

Started looking at Olympus when it fell to 20, then was cut in 1/2 and I could tell those investment losses were not central to their franchise but a management that hides stuff is not one you want to be in bed with so I never got comfortable and didn't buy. But eventually the stock made its way to about $5 and at that price the market cap was slightly above $1B and their endoscope business alone generates almost $1B in net profits every year!! So I bought then.