Market Overview

Whitney Tilson Publishes Latest Reasons For His Lumber Liquidators Short Position

Share:
Whitney Tilson Publishes Latest Reasons For His Lumber Liquidators Short Position
  • In a new article, Whitney Tilson reveals he is still aggressively short Lumber Liquidators Holdings Inc (NYSE: LL).
  • After speaking to two former installers, Tilson calls the company “rotten to the core.”
  • Lumber Liquidators’ stock has fallen more than 80 percent from its 52-week highs but has shown little reaction to Tilson’s revelations so far.

On Monday, Whitney Tilson, founder and Managing Partner of Kase Capital Management, published a new article on Seeking Alpha focusing on Lumber Liquidators. Despite the huge plunge in the company’s share price, Tilson believes that the stock has plenty of room to the downside and has maintained a large portion of his short position.

Related Link: Lumber Liquidators Still In a State Of Flux

Condemning Stories

The major focus of Tilson's article is interviews he conducted with two former Lumber Liquidators installers, who reveal that the company has had major issues with many of its product lines and has handled customer complaints very poorly.

The first installer worked for Lumber Liquidators from 2011 to 2014 and said that the company pushed manufacturers to produce extremely low-cost and low-quality flooring materials with high water content that caused floors to contract and buckle over time.

“The manufacturer is supposed to season the product for months: take the rough cut, then put in a big room or an oven to decrease the moisture content down to 6%, then put it through the finishing process. But Lumber Liquidators pushed its manufacturers so hard that all of the company's products were coming in wet: 20-28% moisture content,” he explained.

A second installer confirmed the horror stories about Lumber Liquidators flooring, but added that customers’ complaints were often blown off or deflected by inspectors with questionable motives.

“The inspectors, many of whom are low quality and unscrupulous, side with whoever pays them,” he told Tilson.

Staying Short

Tilson feels so strongly that Lumber Liquidators has more downside remaining that he is maintaining a large portion of his short position even after the share price has declined more than 80 percent. “Everything I've heard, read and observed leads me to believe that Lumber Liquidators is rotten to the core,” he wrote.

Market Shrugs It Off

Lumber Liquidators may have fallen more than 80 percent from its highs less than a year ago, but the market seems to be shrugging off Tilson’s latest revelations. The stock was trading mostly flat early in Monday's session.

Disclosure: the author holds no position in the stocks mentioned.

Image Credit: By Dwight Burdette (Own work) [CC BY 3.0], via Wikimedia Commons

Latest Ratings for LL

DateFirmActionFromTo
Aug 2020Morgan StanleyMaintainsUnderweight
Aug 2020WedbushMaintainsNeutral
Jun 2020Morgan StanleyMaintainsUnderweight

View More Analyst Ratings for LL
View the Latest Analyst Ratings

 

Related Articles (LL)

View Comments and Join the Discussion!

Posted-In: Whitney TilsonAnalyst Color Short Ideas Hedge Funds Analyst Ratings Trading Ideas General Best of Benzinga

Latest Ratings

StockFirmActionPT
WMTOppenheimerMaintains152.0
FBOppenheimerMaintains300.0
ASHEvercore ISI GroupInitiates Coverage On80.0
RPMEvercore ISI GroupInitiates Coverage On90.0
DOWEvercore ISI GroupInitiates Coverage On58.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com