It's been nearly six months since my last post on GNC. However,...

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.