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Krispy Kreme's Great-Tasting Rarnings, and Herbalife's Not-So-Fun Day

By Jack Kramer and Nick Martell - Mar 13, 2014 at 7:00AM

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Good morning, good lookin'. Here are the three things you need to know on March 13.

Just because it was the 25th birthday of the World Wide Web yesterday doesn't mean you should go and buy some tech stocks as a gift (though it would be a nice gesture). The Dow Jones Industrial Average ( ^DJI -1.86% ) dipped 11 points Wednesday for its third straight loss, as investors remain wary of fresh news from Ukraine.

1. Ukraine crisis grows on investors' minds
Those East-vs.-West jitters are still weighing on Wall Street. Wild and crazy Vladimir Putin stated that if the people of Ukraine's "Little-Russia," also known as Crimea, want to join the Russian Federation, then ... let's just say Putin has already booked Grey Goose bottle service in clubs across northern Asia for the welcome party. That possible annexation is freaking Wall Street out, man.

President Obama finished his interview with Zack Galifianakis and moved on to the new PM of Ukraine. The pro-Western Prime Minister Yatsenyuk is furious with Russia's intervention in his country. The two leaders vented about Putin together in the Oval Office on Wednesday (word is the guy never puts the toilet seat back down) and promised they had each other's backs.
Who's going to blink first? The people of the Crimean peninsula will vote this weekend on joining the Russian Federation. How Putin and Obama react, and the geopolitical ripples those reactions could cause, will be on the minds of investors who just want economic peace and quiet.

2. Herbalife falls on new FTC inquiry
The Federal Trade Commission, which fights to protect consumers from fraudulent businesses, is investigating Herbalife ( HLF -3.66% ) for potentially questionable businesses. Herbalife announced the news Wednesday in a company report but said it's excited for the investigation to reveal that its actually just an awesome dietary-drink company and not a ridiculous Ponzi scheme.
Isn't there a bit of a hedge-fund cat fight here? Famous heavyweight investor Carl Icahn owns a lot of Herbalife stock, while hedge-fund manager (and Icahn's rival) Billy "the Kid" Ackman has bet a lot of money that it will lose. Yeah, the fat-cat fight is on.
Ackman goes to Washington often. According to a report last week by The New York Times, Ackman is hanging out with lawmakers 24/7, lobbying hard to convince them that Herbalife is a "pyramid scheme" that only survives by doping salespeople to buy loads of inventory to sell themselves. The Times pointed out that Ackman stands to make a lot of money if Herbalife stock falls, since he has massive "short" bets that gain in value as the stock declines.
It's been a terrible short so far for Ackman, and a win for Icahn. Icahn has watched with pleasure as the stock rose 46% in the past 12 months. On the flip side, Herbalife's rise has been the bane of Ackman's existence, as his very public campaign to reveal the truth that Herbalife stinks has fallen on deaf ears. The 7% drop of the stock on Wednesday was a small token of relief for Ackman's Herba-nightmare.
3. Krispy Kreme earnings taste phenomenal
Here's some sweet news ... if you're the lucky/hungry/potentially overweight shareholder of Krispy Kreme (NYSE: KKD), the stock jumped 10.2% in after-hours trading Wednesday after the doughnut legend reported a surprising profit of $14.8 million last quarter, up from $4.8 million the year before. Eat it, Dunkin'.

What's driving the sugar binge? Krispy Kreme isn't just the favorite post-game junk-food treat handed out by cool Midwest hockey moms -- two strategic changes have helped the company. First, offering coffee and other quality beverages has improved customer traffic. And second, Krispy Kreme has started adding stores abroad (although international growth has been slow, investors like the overall expansion plan). Doughnuts in Kuwait? Cool.

The takeaway is that Krispy Kreme's glazed, fried treasures are consistent and predictably good -- but its financials? Not so much. The stock has been known to be volatile on Wall Street, given the company's inconsistent bottom-line performances. So Wednesday's impressive profit figures satisfied investors, leading to the stock surge.

  • February retail sales
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MarketSnacks Fact of the Day: The average cash bonus on Wall Street last year jumped to $164,530.

As originally published on

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,483.72 (-1.86%) $-652.22
Herbalife Ltd. Stock Quote
Herbalife Ltd.
$37.36 (-3.66%) $-1.42
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
$58.99 (-3.42%) $-2.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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