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5 Dumbest Things on Wall Street: Dec. 16

Stocks in this article: GS PTRY BBY BRK.B DMND

5. Diamond Goes Nuts

Say what you want, but in our opinion the recent trading in Diamond Foods (DMND) has been flat-out nuts.

Hey, if the shell fits!

Shares of Diamond, which makes products such as Emerald Nuts and Pop Secret popcorn, cracked Monday, falling almost 23% after the company delayed the filing of its first-quarter results because of an investigation into the accounting for its walnut payments.

The snack maker's smack-down came a single trading day after its stock jumped more than 50% as a result of a Wall Street analyst's concluded the walnut payment controversy would not force it to restate past results.

San Francisco based-Diamond has said its audit committee expects to complete its examination by the middle of February and it plans to file its quarterly results "as soon as practicable" once the probe ends.

Come on guys! Let's get popping already on that inquiry! P&G (PG) has been not-so-patiently waiting for a while now to sell its Pringles chip brand to you for a cool $1.5 billion. And they want the whole truth, not just a kernel.

Further clouding the controversy was a report in Monday's Wall Street Journal which debated whether Diamond's payment to walnut growers in September was really an advance for their 2011 crops as the company originally stated.

According to the WSJ, a number of growers said that they never planned to deliver 2011 crops to Diamond and were told by the company that the additional payments were for their 2010 crops.

The story took another turn on Thursday when the Securities and Exchange Commission said it's launching its own probe into the matter. The stock fell another 5.5% to close at $27.84, putting the shares down more than 40% so far in 2011.

Quite honestly, we thought the whole matter was resolved last Friday after a KeyBanc Capital analyst confidently stated that Diamond "has properly accounted for the various payments it made to its growers and (we) expect the investigation to be wrapped up rather quickly." Based on this all-clear signal, we felt more chipper about the situation, and based on the stock's reaction, we weren't the only ones.

Alas, we were wrong. So strap yourselves in folks. It looks like the nuttiness surrounding this stock could last a long, long time.

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