{"id":1,"date":"2012-03-22T22:37:32","date_gmt":"2012-03-23T02:37:32","guid":{"rendered":"http:\/\/www.barbellinvestor.com\/picks\/?p=1"},"modified":"2015-02-15T13:48:15","modified_gmt":"2015-02-15T18:48:15","slug":"nuts-and-bots-a-tale-of-two-companies","status":"publish","type":"post","link":"http:\/\/www.barbellinvestor.com\/picks\/2012\/03\/nuts-and-bots-a-tale-of-two-companies\/","title":{"rendered":"Nuts and Bots – A Tale of Two Companies"},"content":{"rendered":"

It seems appropriate, only a month since Charles Dicken’s 200th<\/sup>\u00a0birthday, that someone once again misuses a Dickensian construction. In this case, the two companies are\u00a0Diamond Foods<\/strong>\u00a0(Nasdaq: DMND), a food company focusing primarily on branded packaged consumer products and\u00a0iRobot\u00a0<\/strong>(Nasdaq: IRBT), a robot maker for the consumer, law enforcement and military markets.<\/p>\n

 <\/p>\n

If share value on were the sole benchmark of comparison, then about a month ago, on February 9, 2012, only two days after Dickens 200th<\/sup>\u00a0birthday, these two companies would appear to be nearly the same company, with each losing ONE THIRD OF THEIR ENTIRE VALUE!.\u00a0 On closer examination, however, the differences are striking.<\/p>\n

 <\/p>\n

\"Diamond<\/a>

Both companies look similar on February 9, 2012. Chart courtesy of Google Finance<\/p><\/div>\n

In addition to being in entirely different business, other differences include this; Diamond, which was nearly four times its February 9, 2012 share price at its all time high, had just announced that it fired both the CEO and CFO because of an accounting fraud.\u00a0 In addition, two years worth of financial statements will need to be restated \u2013 totaling eight quarters of recalculation.<\/p>\n

 <\/p>\n

iRobot, whose all-time share high was not even double its current price, fell based on an announced lower outlook for the next fiscal year.\u00a0 It had just posted record profits for its previous quarter and for the full year. No restatements necessary.<\/p>\n

 <\/p>\n

Fast forward to late March 2012; what do we know today that can add to this story?<\/p>\n

 <\/p>\n

Over the preceding month, Diamond Food\u2019s hoped for acquisition of the Pringles brand was terminated – Pringles is instead being acquired by Kellogg. \u00a0More recently, it suspended its dividend, needed to reach a forbearance agreement with creditors (which it finally did) and is thought to have hired an advisor to \u201cstrengthen its balance sheet\u201d.\u00a0 Unfortunately, there is already talk of probable covenant breaches on the forbearance agreements as the real spending and\/or losses are calculated and the fake earnings evaporate into the ether.\u00a0 Possibly as a way to improve its poor situation and improve its balance sheet, one report has Diamond looking for potential outside investors through a potential private placement in public equity (PIPE).\u00a0 Finally, not surprisingly given its restatement situation, Diamond has received a Nasdaq Notice of Late Filing of Form 10-Q.<\/p>\n

 <\/p>\n

What about iRobot?\u00a0 iRobot has quietly announced a few new patents, partnerships and orders.<\/p>\n

 <\/p>\n

While both companies were treated similarly by the market on that day in February, what we choose to do from that point onward IS in our power. \u00a0Take the market’s quick, blunt, possibly inaccurate judgments and use them to choose investments, sorting investment ideas into groupings: follow up or not, short thesis or long, high probability or low, and long term or shorty. Don’t let the market’s decisions rule you, use them to enhance your investing efforts.<\/p>\n","protected":false},"excerpt":{"rendered":"

It seems appropriate, only a month since Charles Dicken’s 200th\u00a0birthday, that someone once again misuses a Dickensian construction. In this case, the two companies are\u00a0Diamond Foods\u00a0(Nasdaq: DMND), a food company focusing primarily on branded packaged consumer products and\u00a0iRobot\u00a0(Nasdaq: IRBT), a … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,3,8],"tags":[35,12,34,11,10,9],"class_list":["post-1","post","type-post","status-publish","format-standard","hentry","category-food","category-small-cap","category-technology","tag-diamond-foods","tag-dickens","tag-irobot","tag-metaphor","tag-packaged-goods","tag-robots"],"_links":{"self":[{"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/posts\/1","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/comments?post=1"}],"version-history":[{"count":7,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/posts\/1\/revisions"}],"predecessor-version":[{"id":17,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/posts\/1\/revisions\/17"}],"wp:attachment":[{"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/media?parent=1"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/categories?post=1"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.barbellinvestor.com\/picks\/wp-json\/wp\/v2\/tags?post=1"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}