Monday, July 11, 2011

Bought the $FARM

[guest post by TS]

Last Friday afternoon and over the weekend I was thinking about penning a somewhat derisive article about the coffee patch, about how JVA, CBOU, GMCR, SBUX, and PEET can fly so high, while the ho-hum performance of FARM just peters along a low level at about 0.25 sales.  While Farmer Brother Company's sales have been rising steadily YoY, they have yet to have a profitable quarter in at least the past four--clearly the fact that investors were ignoring them was quite warranted.

Then, this afternoon I was tracking the anti-negative-market antics of JVA and CBOU, when I saw this article NASDAQ stock posting largest percentage increases, I was floored by the first company listed:

"A look at the 10 biggest percentage gainers on Nasdaq at 1 p.m.:
Farmer Brothers Co. rose 21.0 percent to $11.68. Inc. rose 13.1 percent to $5.97.
Donegal Group B rose 12.2 percent to $19.53.
Quantum Fuel Systems Technologies Worldwide Inc. rose 10.4 percent to $5.26.
GSV Capital Corp. rose 9.0 percent to $17.65.
PDL BioPharma Inc. rose 8.1 percent to $6.22.
Coffee Holding Co. rose 8.0 percent to $28.90.
Caribou Coffee Company Inc. rose 7.6 percent to $14.63.
Vasco Data Security International Inc. rose 6.4 percent to $13.70.
Fst Savings Fncl rose 6.0 percent to $16.48."

I got in, then, at just over $12.  I could kick myself for not doing anything about FARM on Friday.  Of course investors would see JVA jump, see the apparently under-value of FARM (despite lack of earnings), and similarly pounce.  FARM was deservedly priced around $9 on Friday, and it serves me right that it should be at $12 this afternoon, and will probably close at $11.50 after I bought in  (somebody must be selling if I'm buying, right?). Alan Elliott posted for last Thursday that "...dealing in coffee is no pledge of success. Coffee distributor Farmer Brothers (FARM) has only logged one profitable quarter since 2007. The stock is down 45% so far this year."

Have I just bought the FARM, or will this misbegotten company follow the other coffee companies to more than just a caffeine high?


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