Case Name :      Selling Short: Green Mountain Coffee Roasters

Authors :           Martin Dirks

Source :             Ivey Publishing

Case ID :            W12073

Discipline :        Finance

Case Length :    18 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Green Mountain Coffee Roasters is considered as a short sale candidate. (A stock sold short makes money if the stock price declines.) This business is growing at a high rate, but there are signs of potential problems. This is a very real illustration of bullish investors versus bearish investors. Like a mystery novel, there are spies, possible misrepresentation and conflicting information. Decision-making under uncertainty is explored, a factor professional investors must deal with every day. Case discussion topics include risks in short selling, margin loan calculation, investor behavior, stock valuation analysis, forecasting business growth potential, forecasting earnings reports, management incentives, actions taken by management to increase stock price, aggressive accounting practices, assessing business impact of a patent expiration and the impact of business growth rate on stock market valuation.