ValueWalk received the following email from Whitney Tilson regarding his short position in Lumber Liquidators Holdings Inc (NYSE:LL)
The Robin Hood Investors Conference, which ended this afternoon, was fantastic. My brain is bursting with a ton of great long and short investment ideas!
Gates Capital's ECF Value II fund was up 9.4% for the first quarter, compared to the HFRI Event-Driven Index's 8.2% gain, the Russell 2000's Value Total Return Index's 21.2% gain, and the S&P 500's 6.2% return. Q1 2021 hedge fund letters, conferences and more Gates Capital Management is an event-driven value . . . SORRY! Read More
Attached are the slides I presented this morning with my analysis of one of my most recent short positions, Lumber Liquidators (LL), which trigged a 12% drop in the stock today; to download the report by the Environmental Investigation Agency that I cite on page 13 and watch the entire EIA video embedded on page 14, see: http://eia-global.org/campaigns/forests-campaign/liquidating-the-forests).
I’m convinced that a meaningful contributor to the company’s unprecedented margin expansion in the last two years is due to sourcing large quantities of illegally harvested and imported hardwoods. With federal authorities having raided LL’s headquarters two months ago, the company is under intense scrutiny and will have to ensure that its supply chain is pristine. I believe this is likely to be highly disruptive and cause margins to revert back toward historical levels, which is most definitely not priced into this high-flying stock.
Even after today’s drop, I think the stock, which has risen seven-fold in less than two years, has much further to fall, as it still trades at 41x trailing earnings and 21x trailing EBITDA.
If you have comments, insights, or information about Lumber Liquidators, please let me know!
Lumber Liquidators Presentation-Whitney Tilson-11!22!13 by ValueWalk.com