Lumber Liquidators Surges After Short Seller Ends Fight

Short Seller Tilson Stops Bet Against Lumber Liquidators
  • Whitney Tilson says there's likely to be no `smoking gun'
  • Shares spike 25 percent for biggest increase since 2012

Lumber Liquidators Holdings Inc., stung by allegations that it knowingly sold flooring with high levels of formaldehyde, jumped the most in more than three years after short seller Whitney Tilson said he stopped betting against the company.

Tilson, who spent months crusading against Lumber Liquidators, said he received information that leads him to believe senior management was probably unaware of the formaldehyde problems. He declined to comment further.

“If there is no ‘smoking gun’ documents/emails, then the doomsday scenario for the company and the stock is less likely,” Tilson, the head of Kase Capital Management, said in a column on the Seeking Alpha website.

The stock gained 25 percent to $17.53 on Tuesday in New York, the biggest advance since July 2012.

Lumber Liquidators has been in turmoil since “60 Minutes” reported in March that the company sold Chinese-made laminate flooring with unsafe levels of formaldehyde. Tilson pitched the story idea to the news program and appeared in the segment. The stock plummeted more than 70 percent in the aftermath of the allegations, and the scrutiny prompted the U.S. Consumer Product Safety Commission to begin an investigation.

If Lumber Liquidators wasn’t aware it was selling flooring with excessive formaldehyde, “then the company was sloppy and naive, but not evil,” Tilson said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE