Why Diamond Foods Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Diamond Foods (NASDAQ: DMND  ) were looking tastier today, gaining as much as 13% after the BlackRock investing group disclosed a stake in the snack maker.

So what: According to an SEC document filed on Friday, BlackRock, the investment giant with over $3 trillion in assets under management, purchased a 7.85% stake in Diamond Foods, the maker of Kettle chips and Emerald nuts, among other food products. Diamond's stock has had a tumultuous past couple of years, dropping more than 80% amid an accounting scandal that led to the ouster of its CEO and CFO and the restatement of financial results, which erased $56 million in profits.

Now what: BlackRock's investment is a major vote of confidence in Diamond's ability to turn things around. New CEO Brian Driscoll brings experience from running Hostess Brands, and has promised to cut costs and invest in the company's brands. Despite its inability to acquire Pringles from Procter & Gamble, Diamond still has a strong brand portfolio and should be able to return to profitability now that the accounting shenanigans are behind it. I expect the stock to move higher eventually as the company recovers.

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  • Report this Comment On February 12, 2013, at 1:15 PM, JNadly2 wrote:

    I hope the day comes when Diamond has to answer financially to all the pets they've sickened with their poor quality control. As a pet who died from eating Diamond created food, I can't wait to short this profit-focused company should they ever slip.

  • Report this Comment On February 19, 2013, at 8:06 PM, walnutexpert wrote:

    @JNadly2: The pets sickened were from Diamond Pet Foods, which is a different company and is in no way associated with Diamond Foods.

    Diamond Foods has the following brands:

    Diamond (inshell and/or retail packed baking nuts)

    Emerald (retail packed snack nuts)

    Pop Secret (popcorn)

    Kettle (potato chips)

    They are not to be confused with Blue Diamond (the almond company) or Diamond Pet Foods (not related to either of the previous companies).

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