Whitney Tilson Doubles Down Against Lumber Liquidators

Short-seller Whitney Tilson doubled down on his bet against Lumber Liquidators Holdings Inc. LL after it halted sales of Chinese laminated flooring. Lumber Liquidators spiked Thursday after the company said it would stop selling the products; shares changed hands recently at 27.74, up about 2 percent. "The market is totally misunderstanding what's going on here," according to Tilson, who said he "materially increased my short position" Thursday. The Toano, Virginia-based retailer is off about 57 percent since a "60 Minutes" news report in Mach alleged that the flooring products fail to meet California emissions standards on formaldehyde. The report relied in part on Tilson as a source, and noted his short position in Lumber Liquidators. Although the company has said its products are safe, on Thursday it said it will discontinue sales of the flooring in question, citing "mounting industry concerns relating to laminate products sourced from China." The company didn't provide an estimated cost for its decision. "This is one of the most immoral, reckless and truly insane decisions I have ever seen a company make," Tilson said. Tilson speculated that "intense pressure from regulators" forced the move. "I simply don't believe it would halt sales of its own volition, given that it will have to write off $13 million of inventory and be out of stock on some of this high-margin product for many months," Tilson said. "We may look back upon this day as a decisive point in the eventual collapse of Lumber Liquidators," Tilson said. Short interest in Lumber Liquidators crept up to more than 26 percent of its public float as of April 15, from about 22 percent in mid-March.