Abstract:
Green Mountain Coffee Roasters is considered a short sale candidate (a stock sold short makes money if the stock price declines). The business is growing quickly, but there are signs of potential problems. The case provides a realistic illustration of bullish versus bearish investors. Like in a mystery novel, there are spies, possible misrepresentation, and conflicting information here. Decision-making under uncertainty is explored — a factor professional investors must deal with every day.
Case topics include risks in short selling, margin loan calculation, investor behaviour, stock valuation analysis, forecasting business growth potential, forecasting earnings reports, management incentives, actions taken by management to increase the stock price, aggressive accounting practices, assessing the business impact of a patent expiration, and the impact of a business growth rate on stock market valuation.
Keywords:
Short Selling, Hedge Funds, Investment Analysis, Stock Valuation, Earnings Management, Bullwhip Effect, United States, Selling Short Green Mountain Coffee Roasters Case Solution
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