Whitney Tilson: Why I Am Writing So Many Articles About Lumber Liquidators; Bull-Bear Debate

1) I turned yesterday’s Q&A into an article I just published – my 12th since the 60 Min story.

12 – an even dozen – is such a nice, round number, but it’s not going to last for long, as I’m almost finished with another article… ;-)

2) Lunch should be fun: I’m going to a bull-bear debate on Lumber Liquidators, hosted by Piper and moderated by three of their analysts. They expect 17 investors interested in the stock to be there. Wish me luck!

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Whitney Tilson on why he is writing so many articles about Lumber Liquidators; bull-bear debate


This is the 12th article I’ve written about Lumber Liquidators since the 60 Minutes story about the company aired on March 1st

  • I am not writing to influence the stock price, as I don’t care where it trades in the near term
  • My long-term view of the company leads me to believe the stock has at least 50% downside
  • There are seven reasons I’ve written – and will continue to write – so many articles
  • These reasons far outweigh the many downsides

This is the 12th article I’ve written about Lumber Liquidators (you can download a pdf of the prior ones here) since the 60 Minutes story about the company aired on March 1st – and third one this week – which led one of my readers to email me:

You are seriously moving the stock in the opposite direction you want to be moving it every single time you post.

You can’t honestly think you’re winning over any converts at this point. It’s working out in Lumber Liquidators’s favor – their argument is that short sellers did this to them (which we know is absurd), but it gains credibility in the public’s eye when the most visible and vocal short seller keeps making his case by publishing several articles a week.

I think it’s time to give it a rest and just let it implode on its own.

The Q1 results will be abysmal (increased ad spending and the brutal margin) and will show that they can’t be a viable business going forward. Also, the disclosures relating to investigations, inquiries, and lawsuits will be the headlines.

Just my two cents.

Here is the reply I sent him:

I don’t believe my articles have any impact on the stock in the short term, either positively or negatively – but even if you showed me stock charts demonstrating that the stock jumped when I published a new article, I wouldn’t care. It makes no difference to me if the stock trades at $45 or $25 in the near term because this isn’t a trade for me. I’ve been short the stock for 18 months and would be surprised if I’m not short it for quite a while longer. I have a long-term view of the company what mirrors yours – and if we’re right, then I’m confident that the stock will fall at least 50% from here.

So why write so many articles? There are many reasons:

1) I’m outraged by what I think Lumber Liquidators is doing. Every day, they are selling a what I believe to be a very dangerous product to thousands of unsuspecting (or overly trusting) American families, likely causing significant adverse health effects in many of them, especially among children, as I documented in yesterday’s article, Lumber Liquidators, Formaldehyde And Asbestos. I believe this is truly evil. Until they stop – or until someone (likely a regulator) convinces me that the product is, in fact, safe – I will not let up one bit.

2) While I don’t think any one article is “winning over any converts,” I do think that all of the articles I’ve written since the 60 Minutes story aired are a valuable resource and road map for anyone interested in this company: regulators, politicians, reporters, investors, consumers, etc. For both selfish and selfless reasons, I want as many people to know the truth (as I understand it) about this company – what it’s done and, worse yet, is still doing.

3) I had no plans to write so many articles, but every day I see more bad analysis, faulty assumptions and unsupported assertions, and I feel compelled to respond – in part on principle and in part because some of it is directly or indirectly saying that my facts and analyses are wrong.

4) I find it to be incredibly intellectually stimulating to dive deeply into a particular company and industry, and it helps me clarify my thinking to put my facts, analyses and conclusions in writing.

5) Making my work public means it becomes subject to scrutiny, which is healthy – if I’ve made a mistake, I want to know about it!

6) I’m a one-person operation – I don’t even have one analyst to go into the field and do research for me, so I rely on people who read my articles to contact me and share information – people like Lumber Liquidators employees and former employees, installers, customers, competitors, other industry players, etc. Every article I publish leads to a few more people contacting me with valuable insights and information.

7) Every day I’m learning new things. Last week, for example, I had a very illuminating 90-minute conversation with Dr. Philip Landrigan, one of the world’s leading experts on exposure to toxic chemicals, who was interviewed by 60 Minutes. Given how many people are interested in this company/stock/debate (and having long ago decided to be very public regarding this investment), I feel like it would be selfish to keep this information to myself.

I take very seriously the fact that I have taken actions that have contributed to a huge disruption and untold expenses for Lumber Liquidators, severe losses for investors long the stock, and significant effort and expense on the part of numerous regulators. In light of this, I figure the least I can do is openly share what I’m learning – and not only the bad stuff. For example, it doesn’t help my short thesis to share (as I did in yesterday’s article) what Dr. Landrigan said about the formaldehyde levels in Lumber Liquidators’ Chinese-made laminate being very unlikely to cause cancer, and probably off-gassing down to safe levels within 3-6 months.


There are many downsides, of course, to writing so frequently: it takes time; I have to put up with the inevitable slings and arrows; maybe my reader is right that some people think I’m piling on and thus view the company more sympathetically; and it increases the risk that the company sues me (which would be a pain, but I’ve dealt with this kind of harassment before – and I would gladly trade discovery against me in exchange for discovery against them, as I have nothing to hide…but I’m quite certain that they do).

But net net, the upsides far outweigh the downsides, so I continue to write.

I hope someday to exhaust the topics about which to write, but I see little sign of that right now, as I’m almost finished with another article that I will publish shortly.

PS – I no longer read the message boards for the articles I publish. I do, however, want to hear thoughtful comments and questions so I invite my readers to communicate with me via Seeking Alpha messaging and I will post my answers on the message board.