my 2 cents worth, page-24

It's been nearly six months since my last post on GNC. However, most of the bearish issues have been dispelled.


Potential Issue: Malt business will have write downs and the assets are not great.

A: Malt business has performed up to expectations, even exceeding most analysts' estimates. Don't expect future writedowns of the business given the way it is performing.

Potential Issue: GNC's tangible assets are not worth much.

A: NTA is approx. $4.80/share, which is conservative. NTA of approx. $950 million gives us a clear indication of what replacement value for GNC's assets are. Replacement value should be more than $950 million since GNC carries the value of their assets at cost and they don't re-value them upwards on a constant basis.

Potential Issue: Might not get enough rain.

A: Well, we had loads of rain for the year to date. We just need some decent winter rains to get a great planting season.

Potential Issue: With all the above listed issues, GNC might come in with a major profit downgrade.

A: GNC actually came in with a profit Upgrade. Yes. A profit upgrade, not a downgrade.

Potential Issue: The stock and sector has been shorted regularly as there is no interest in the sector.

A: Given the profit upgrade and strong performance from Malt, I am still amazed at GNC trading under $6. The instos. are starting to warm to the agri. theme and there will be a point in time when GNC will be accumulated. It has already started with the 4mil+ turnover a few days ago. As for short sellers, I hope they know what they are doing shorting GNC. I would not be shorting a stock like GNC. Definitely not under $6.50, given their recent profit upgrade.


If you read through my previous posts on GNC, I mentioned that it will take a while before GNC even thinks about surpassing the $7 mark. I mentioned they needed a catalyst and they have just provided the best catalyst to the markets with a great result.

All things being equal, GNC should be outperforming the overall market for the next 12 months.