Sell low?: Another big investor dumps its Starbucks shares

The hedge fund Maverick Capital reports that it's dumped 12.5 million Starbucks shares. Other major investors that recently unloaded their shares were Nelson Peltz's Trian Partners (more than 800,000 shares), and Fidelity Management & Research (5.5 million). It begs the question: Why are some bigger investors cashing out, and do they see new trouble brewing for Starbucks? || Starbucks: Big Investors' Divorce Grounds

Comments

[Tough Questions]

It isn't really about who's selling, the more important question is who the buyers that are paying $16 a share on a non-profitable company are.

[jabanga]

"That may be why investors like Peltz ridded themselves of the stock, which has fallen more than 55% since its all-time peak in October 2006."

i still childishly relish the fact that that was the month i left the company and exercized my remaining stock options.

[Pat Nerr]

interesting to say the least... this may be worth waiting this out...

[espressoblend]

It shows that the major institutional investors have no (short-term) confidence in this company. We'll see... it's up in the air. What's happened (store closings, layoffs) will start showing up big time in next year's numbers, so I'm sure things will be vague until then.

[truth]

Or maybe they know that the deal has already been made.

The game is over, folks.

[cornfrost]

Jim,
You, the BW editors, and the writer (who is an intern) are misusing the phrase "begs the question." The intern can be excused but you should know better.

[Coffee Mistress]

What deal, Truth? You have been cryptic, at best, in this regard long enough. Either share or stop, please.

[wholahay]

Amen Coffee Mistress!

Truth, either spill or STFU!

[ex coffee wench]

i see what truth is saying.....buyout.....takeover......merger with pepsi....read between the lines folks. the bucks will nerver be the same as it was back in the 90's...sinking ship.

[LoveTheWNBA]

Actually I heard starbucks was opening new stores on mars.

Don't believe these lies, if they had the facts they would clearly post their sources.

[Torontodude]

The general Web rule applies here:

Beware of anonymous posters spreading unsubstantiated rumors based on supposed inside information....with no sources or details provided.

The posters may have a financial interest in "talking down" the stock price.

[The Unknown Comic Of SB]

Lets wake up folks, starbucks has whored itself out to investors, the truth is in, and its ever so Sh*t smelling...emm...yummy.

Why don't we stop this bickering and recognize that now the companies being siphoned off into little pieces, and that the customer deserves the worst kind of customer service on a sinking ship.

I'm sure you all remember that poster from Despair.com

Customer Disservice"

Because we're not satisfied till your not satisfied

Lots of love,

- TUCOSB

[Joe]

Hey Truth,

Why in the world would the institutions get out if they know a deal's been made? Surely you're not suggesting if there is a deal, it's gonna play out at LESS than the current stock price? It seems to me if they thought there was a buyout coming, they'd stick around for awhile and see where the price of the stock went.

[Pat Nerr]

you mean like the board members are doing? They've all bought... and not at the low

[P.R.I.D.E.]

Truth is a self-proclaimed day trader, please remember this partners! It is his business to create fear, get you to sell, lower the stock price, so he can pick up low and then hold! He has been caught several times with this, so please just disregard his comments...

[truth]

I love the selective enforcement of the 'no personal attacks' rules here.

That said, I'll never divulge any more details than I already have, because it would put people's jobs in jeopardy.

But, I will add this: I'll never own shares in this company again, and apparently a few large investors agree, too.

And, with each sniping attack you toss my way, I'll just relish your eventual fate even more. I'm laughing inside already.

[truth]

@ Joe- You answered your own question. You are getting warmer.

[sue de nimes]

truth, the crypto-quiz, "I know something you don't know" stuff is sort of mildly eyebrow raising, but not much else. You're not going to get credit for "I said this all along" when you've in fact said essentially nothing. Presumably, you're suggesting a sale, merger or bankruptcy or a major executive shakeup... but that's a lot of ifs, and most of them mean little, in the immediate term, to those of us who do what we do at the local, 'bucks level. None of those options, even bankruptc, would necessarily mean that Starbucks, in any form, would cease to exist. (And the joy you seem to take in other people's suffering doesn't speak well of you, either.)

Am I worried about someone like Peltz dropping out? sort of, but I think the macro economic problems - the recession we're having, the credit crisis, etc - make it hard to see how a higher end retail operation like Starbucks won't see a falloff in sales. It would be prudent, it seems to me, for investors who are trying to minimize their exposure to the downturn to avoid retail of all sorts (except probably JC Penney or Walmart) for the short term. Whether that proves that Howard's a failure and the company's "going down" (in some mysterious, yet to be seen way) is an open question... but one that's unlikely to be answered any time soon. What I know of sales at the store level is that things are flat... but not way down. If that holds - and I don't know if it can - then it seems to me Howard and the company can weather a downturn. If sales fall a lot further... then I'd think all bets were off. But if that happens, I'd say the economy more generally would also be in sad shape, at which point the fate of Starbucks is really the least of any of our worries... certainly mine.

[Darleen]

And, with each sniping attack you toss my way, I'll just relish your eventual fate even more. I'm laughing inside already.

I don't see any personal attacks here, just folks wanting to know what you know, if anything at all. The idea that you will laugh at someone's fate however is a bit of a put off. These are people's livelihoods we are talking about here and of course when you come online and portend things then you can't answer specifics, people are going to cry foul. No one is attacking you Truth, however the cryptic messages are indeed getting old. It's like the boy who cried wolf, you can only listen for so long until you have had enough.

[adam]

Starbucks is no longer a growth story. They can't deliver those big increases in earnings to Wall Street anymore so some investors are moving on. I think the company will try to transform itself into a sort of Panera to try to boost earnings. They can't meet expectations by pushing coffee products, especially when they are so bad at it.

[P.R.I.D.E.]

truth- I specifically recall you stating that we should be worried about Peltz with a huge buy increase, even giving an 8/11 date and creating fear, and then *poof* Peltz sells. So for me, you were caught. I don't believe that you really know anything, and like I said, you've already divulged that your profession is day trading. It is your purpose to create this fear in partners, and investors who view this site, so they'll sell and you'll pick it up.

This has nothing to do with a personal "attack"...it is just calling your bluff. Some partners are newer to this site, but for those who've been around for awhile, your game is very transparent to us.

[Jimmy]

Acutally, if he is a day trader, it is more likely that he has shorted the stock, thus making MUCH more money if the stock goes down than the old "buy and hold" model...

[SSC Hasbeen]

I don't know if "Truth" is legit or not. But I do know some facts.

1) Nothing about Starbucks is as valuable financially (aka, to Wall St.) as "the Brand". Therefore, protecting "the Brand" is Job #1 for the senior executives.

1) Starbucks entire future as a major retail brand depends upon success outside the U.S. Every person in senior management has been saying it for years.

2) There is no real growth story internationally without "getting it right" in China. Again, senior management has been talking about China being key to success for years.

3) Only a few American retail companies have ever gotten it "right" in China. Yum Brands (formerly Tricon Global, formerly PepsiCo) is one of those companies.

4) Two long-time members of the Starbucks board (Craig Weatherup and Olden Lee) are former senior executives of PepsiCo who were involved in the Pepsi-Tricon-Yum series of events.

So what? Speculation, gossip, innuendo, whatever. But would it be so surprising to hear that Starbucks is to become the latest member of the Yum Brands family?

[Jeff]

Jimmy, of course, has the day trader behavior correct. Additionally, seemingly lost in the shuffle of reading the accompanying article is the fact that other institutional investors have INCREASED their holdings in SBUX over the same period that other institutional investors have decreased their holdings. Also, it is left unsaid if the selling of shares in SBUX by these institutional investors was a sale of ALL shares or just a portion of the shares they hold.

The answers would further illuminate the reader/us. I sold my shares recently for a myriad of reasons, primarily that it seemed like a good time to divest myself of my IPO shares as part of restructuring my portfolio to more stable, income producing securities. Being retired early allows me to do that; however, I will also keep an eye on SBUX and if I see actions being taken that I like, I wouldn't be opposed to buying again. Right now, I don't see that happening, but who knows what the future may hold.

[Jeff]

SSC Hasbeen: probably not since there has been a press release that the bottled Tazo teas will now be produced by PepsiCo. This will not end the association with Kraft; it will just add Pepsi as a bottler with Kraft maintaining other associations with SBUX and the Tazo teas. Heard about this this morning at...my neighborhood SBUX!

[Pepsi anyone?]

Am I the only one who saw the press release at starbucks.com about moving once again closer together with pepsi? I know the pepsi horse already got beaten quite often here, but for me this is just another sign this is going to be our future. YUM brands might play well into that as well, given their history.

[snagger]

All you employees would be wise not to maintain any vacation on the books as eventual changes overtake SBUX.My friend was terminated at the SSC and was not compensated for two weeks of vacation that wasn't used because she was too busy covering her boss's butt.All her wonderful stock option were worthless and the 401k choices are all losers.The thin covering is wearing of a greedy corporation.Howard's just another New Yorker who has taken advantage of Northwest goodness to accumulate personal wealth.

[Meag]

I think some people worry too much, and others not enough, personally let's just wait it out, whatever happens happens, there might be some good to come out of it in the end ya?

[GlenFelizRegular]

Institutional selling prior to the end of the quarter is fairly common, as they don't want their holders to see they have such "dogs" on their portfolio.

[Joe]

Truth,

Not only did I not answer my own question, you didn't either.

Again, it makes no sense for Peltz or the other big institutions to get out if they know a deal's been done unless they think it will be at a price lower than where the stock has been lately.

And for Pat Nerr...sure the board may have bought high but Peltz didnt...he bought in the mid teens so if he got out one has to think he doesn't believe the stock's going anywhere.

[Pat Nerr]

I could care less about Peltz... he was looking for the short-term gain of scaring everybody that he was involved...

my point with the Board is that IF they knew about something to come, it would make sense that they might pony up some money to get in before the news is announced... of course, it's illegal and way below Starbucks mode of operations...

I'm just sayin'

[truth]

See 'poison pill'.

Takes the stock out of play.

[Joe]

Truth,

I know what poison pills are and I know that they are public information. Presumably Nelson Peltz is a savvy enough investor that he knows these things too; especially since he operates from a much larger stack of cash than I do. He can't possibly have bought in and THEN found out there was a poison pill that would either block further accumulation or something else's efforts to buy the company.

And we have Mr. Insider, Pat Nerr, implying that there IS going to be a buyout which would pretty much nullify your poison pill theory. So I really dont know what you're getting at.

Personally I think Peltz dipped his toe, didnt like what he saw and got out. I would agree...this is a mess of a company and the turnaround, if it even happens, is going to be long and volatile. And the real shame is there were a number of people who saw this coming a couple of years ago (me included) who tried to warn people but no one would listen. And that was back when the stock was at 36.

[stock]

There is a poison pill in our stock option agreements - upon anyone obtaining a 'beneficial interest' in the company, all outstanding grants become immediately exercisable.

Doesn't mean a bunch right now, because most of our options are below the strike price, but could mean a bunch if the stock went up because everyone bought in before a sale.

Howard & Co. are on a different plan, though - I didn't read that contract.

[truth]

Think more gray, and less literal.

[wholahay]

They're going to give us all poison pills and kill all the partners?!?!?!

oh wait..you said LESS literal...

[truth]

@ wholahay: lol!

Of course we all know the perfect antidote to a poison pill: a grande chocolate vivanno! That poison will be out of your system in no time.

[Cut Out The Heart]

This is a very interesting discussion in that it captures the whole new low that is known as Starbucks leadership. One or two quarters of less then expected results and they now have become the fodder for speculators and inside traders. It goes to show you that Howard's leadership skills are limited to only good times. The minute he faces a challenge or people start to question his leadership, he runs and hides. He did it with the Sonics and he is now doing it with Starbucks. I would not be surprised that he is going to take his money and run. His transformation plan is not about tranforming the brand but about tranforming his pocketbook. The empire is crumbling around him because it was built on false promises that were only going to be kept if the profits kept rolling in. My predictions are all the vaunted benefits Howard has promoted for his parnters will be severly altered or eliminated by this time next year. Oh, and the stock options that have been the life blood of loyalty have all become worthless. Howard continues to show that when you sift through all his rhetoric, it comes down to how many Benjamins he has in his pockets. Damn the partners. He should be ashamed of himself and all the people he has in his leadership circle. I challenge them to step up and do what is right for this company and get back to solid values and tell Wall Street to f'fff off. Do it the right way Howard and buy your soul back from the devil.

[BOSTON STARBUCKS REBEL]

Its unfortunate but we have to keep faith.

[Truth or Untruth?]

For goodness sake conspricy theorists, pull "deal" with Pepsi, or other deal involving the Chairman and CEO personally, there is no question it would have been disclosable to shareholders. Immediately. This sort of thing cannot and does not remain "secret" at a publicly traded company, much less a high vis one.

Truth has lurked around here dropping hints that he knows plenty, then crawls away. "Oooh the fix is in", "ooh Howard has done a deal." Big nothing. Maybe it's time Truth you find some other bull board and spend your time there? To quote someone who posted earlier, put up or shut up.

[xsbuxdm]

Institusions dump shares all the time, for many and varied reasons. There are many that would consider this a good time to buy...stocks are cheapest when institutions are dumping them, and begin to creep up as they start to buy again.

I sold all my remaining beanstock and options some time ago, but I am not opposed to holding it again one day. I just don't think it has hit bottom yet. It is definitely on my "watch" list though!