Has Diamond Foods Lost Its Luster?

Growers such as Sally Kafkares, who farms 40 acres in Rio Oso, Calif., say they were underpaid for last year’s crop to the tune of 40¢ a pound. The September payment should be for last year, she says. (Diamond says its pacts with growers are confidential.) “If these costs were improperly allocated, Diamond’s expenses were higher in the prior year and thus its earnings are lower,” Meyer says. “The nature of these payments is somewhat nebulous, and the shorts are saying, ‘I don’t know what’s going on here, but it’s not good.’ ” Short interest as a percentage of Diamond’s shares outstanding (a measure of bets by speculators that the stock will fall) is 41 percent, making it the most shorted stock on the Russell 2000 as of Jan. 9, says data provider Data Explorers.