Tilson Says Liquidators Not Really Evil

December 16, 2015 Debbie Jacobs Hedge Fund News

Lumber Liquidators store, 2321 Ellsworth Road, Ypsilanti Township, Michigan. Photo by Dwight Burdette

Lumber Liquidators store, 2321 Ellsworth Road, Ypsilanti Township, Michigan. Photo by Dwight Burdette

Earlier this year Whitney Tilson, head of the hedge fund Kase Capital, called Lumber Liquidators “evil.” Before his statement he had already begun a short campaign against Lumber Liquidators stock. All this coincided with a 60 Minutes spot about the poisonous Chinese laminate used on some of the flooring from Lumber Liquidators. That broadcast, and Tilson’s statement helped drive what had previously been one of Wall Street’s hottest stocks down from a high of $69 to a low of $12 this year.

That was March. Now, in December, Tilson seems to be regretting his words. Along with taking back what he said at least partly, he is also closing down his short position. In a post he wrote on Seeking Alpha Tilson said that he was in possession of information which implies that Liquidators are not so evil after all. Apparently, at least according to this new information, the senior management at Liquidators did not know that they were selling toxic, formaldehyde Chinese-manufactured floor coverings. Tilson wrote: “If this information is correct, then the company was sloppy and naïve, but not evil.”

The recant seems to have done the trick. Lumber Liquidators shares surged this week, climbing by 21 percent in early trading at an improved $17.11 per share. This seems to fly in the face of Tilson’s original prediction that Liquidators would end belly-up in the face of regulators and plaintiff lawyers now confronting the company.

Tilson won’t reveal, for now, the source of his information which led to his change of heart. He did assert in his post that Lumber Liquidators did indeed continue to sell the toxic laminate for 67 days after the broadcast of the 60 Minutes story when they should have halted sales immediately.

Kase Capital, Lumber Liquidators, Whitney Tilson,

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