Miles J. Stoner, @StockHollywood

Dallas, Texas

11.23.2011

DMND - Pringles deal & Fraud (Need to Know)

Diamond Foods processes, markets and distributes snack products. 
On April 5, 2011 the Company announced that it was going to acquire the 
Pringles snack business from The Procter & Gamble Company. 
The Company represented to investors that the Acquisition would be
 completed by December 2011, which was to be true, but then these allegations 
came to light. 
 
The Complaint alleges that throughout the Class Period defendants made false
and/or misleading statements and/or failed to disclose that:
  1. The Company was underestimating the ultimate price to be paid to walnut 
  2. growers. 
  3. The Company was improperly accounting for its cost of sales.
  4. The Company lacked adequate internal and financial controls. 
  5. As a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
  6. The Company's positive statements about Diamond Foods' business, operations and prospects, as well as those regarding the timetable for the Pringles acquisition lacked a reasonable basis. 
Hagens Berman is deepening its investigation of Diamond Foods, Inc.'s accounting
 practices and payments to walnut growers for securities violations following 
recent news of the possible suicide of a member of the 
company's board of directors and audit committee.
 
So know we have a pringles deal that was put on hold to investigate these 
shady accounting practices, but 
during this time a member of the audit committee blew his brains out. 
 
on Friday 11/23/11 Dealreporter says, "PG still committed to deal" 
 
 
 
 
So this is the jist of it all, the dark cloud of fraud hangs over diamonds 
head, the suicide 
was in no relation
to the fraud audit. We are dealing with a huge short float here so we
 could definitely see a
 squeeze. Our 
problem is this: We have to preempt the news that the 50mil in relation 
to the walnut growers
 is ok and 
there is no fraud. I think PG coming in and saying the deal is on shows
 that they are placing 
thier bet on the long
side because if the fraud issue was big enough to stop the 2-3billion 
dollar deal then they 
would of pulled 
out and said no deal, them coming in today and saying yes the deal is 
still on, proves that
 even with fraud its 
not a big enough issue to stop this deal. 50million fraud v. 2-3billion 
pringles deal. 
 
Conclusion: this stock is way over sold and we should 
see a temporary bounce from 27
 to 35 before she flat
lines again and the fraud news get sorted out. 
 
I'm long DMND from 27.75.