Two significant hedge fund managers have recently taken significant stakes in beleaguered Lumber Liquidators Holdings Inc (NYSE:LL) and now between them they control over 20% of the stock.
SAC Capital, Lone Pine investments
Steven Cohen and SAC Capital have made a significant investment in the retail flooring firm, according to SEC filings reviewed by ValueWalk. Through a variety of related investment vehicles, the SEC’s 13G report shows that SAC, related companies and Cohen directly own 13.2% of the outstanding shares. Meanwhile, Lone Pine Capital, operated by Stephen Mandel, has purchased a 7.9% stake in the firm.
SAC’s investment comes on the heels of hedge fund manger Witney Tilson very publicly announcing his short position in Lumber Liquidators this past November and explaining it in an e-mail to ValueWalk. In the e-mail, Tilson said that a meaningful contributor of the Lumber Liquidator’s profits was due to sourcing large quantities of illegally harvested and imported hardwoods. This followed federal authorities raiding Lumber Liquidators Holdings Inc (NYSE:LL)’s Virginia headquarters in September when smuggling charges were alleged.
Illegal sourcing issue lobbed against Lumber Liquidators
Then in December, Wedbush analyst Seth Bashman said he believed that the illegal sourcing issue lobbed against Lumber Liquidators was “overdone” and was an isolated incident without major repercussions to the company. After an investigation by Wedbush, Bashman wrote in an investors letter, “We found no indication of illegally sourced logs by other top suppliers identified using Port Examiner Import data,” and indicated he believed the case will be resolved in isolation with minimal outcome.
Even with the positive news, Lumber Liquidators dropped significantly, which led Tilson to crow in an e-mail to ValueWalk published December 10 “and one of my largest shorts, Lumber Liquidators Holdings Inc (NYSE:LL), fell 14% today. I guess even a blind squirrel finds a few acorns… ;-)”
Tilson short selling
In Monday’s trading Lumber Liquidators Holdings Inc (NYSE:LL) closed at 86.88, down 2.37% on the day. The stock has fallen steadily from a recent high in November near $120 when Tilson began his short selling campaign.
In regards to today’s long’s from SAC, according to a schedule 13G filing, SAC Capital Advisors, L.P. owns 843,132 shares, or 3.1% of the outstanding stock; SAC Capital Advisors, Inc owns the same amount; CR Intrinsic Investors, LLC, a related firm, owns 165,000 shares or 0.6%; Sigma Capital Management, LLC owns 385,000 shares or 1.4% and Steven A. Cohen owns 1,393.132 or 5% of the outstanding float.