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EXCLUSIVE: Whitney Tilson Says Lumber Liquidators Stock 'Is A Zero'

EXCLUSIVE: Whitney Tilson Says Lumber Liquidators Stock 'Is A Zero'

In an email sent to investors and Benzinga, Whitney Tilson commented that Sunday's 60 Minutes piece featuring Lumber Liquidators Holdings Inc (NYSE: LL) was "UNBELIEVABLE!"

"I am in awe of the investigative journalism 60 Minutes did, which validated my decision to bring the story to them," the hedge fund manager said. "They uncovered many things I didn't know and I am now even more convinced that this stock is a zero."

Tilson clarified his stake in Lumber Liquidators and noted that "this is a three percent short position."

He added: "If I'm right that the stock is a zero, I make three percentage points of return." The investment manager added that any gains (or losses) attributed to his short position "is not going to make or break me," and "certainly not cause me to make false accusations against a good company."

Related Link: Morgan Stanley Says 'Heightened Uncertainty' A Key Theme In Slashing Lumber Liquidators

'Massive Incentives'

Tilson also argued that Lumber Liquidators' senior executives have "massive incentives" to boost the price of its stock.

Tilson noted that after shares "skyrocketed" from approximately $13 to as high as around $119, the company's founder and Chairman Tom Sullivan and CEO Robert Lynch "dumped a ton of stock and pocketed a small fortune."

Tilson explained that in May and July of 2013, Lynch sold 154,500 shares at an average price of $68.61, for a total of $10.6 million (versus a total cash comp in 2012 of $1.2 million). Lynch sold "every share he could" at that time, Tilson wrote, as his remaining holdings hadn't vested yet.

"So, in summary, I stand to make for my investors less than $3 million if I'm right and the stock goes to zero, whereas just the top two guys at Lumber Liquidators have already cashed out to the tune of $37.3 million," Tilson concluded.

Lumber Liquidators shares are down nearly 22 percent in Monday's trading.

Image credit: Public Domain

Latest Ratings for LL

Jan 2021Morgan StanleyMaintainsUnderweight
Jan 2021Loop CapitalDowngradesBuyHold
Aug 2020Morgan StanleyMaintainsUnderweight

View More Analyst Ratings for LL
View the Latest Analyst Ratings


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