Whitney Tilson’s email to investors discussing the 2019 Gold Rush; Tom Sullivan buys Lumber Liquidators Holdings Inc (NYSE:LL) stock; Target Corporation (NYSE:TGT)’s blowout earnings; Walmart Inc (NYSE:WMT) Says Tesla Inc (NASDAQ:TSLA) Solar Panels Set Fires Atop Stores.
1) I’ve never invested in gold – or any commodity, for that matter.
Q2 hedge fund letters, conference, scoops etc
I don't know how to value it and I have circle of competence issues. That said, I don't view gold as a silly speculation like cryptocurrencies. A number of people I really respect own it, like my friend David Einhorn of Greenlight Capital.
If you're interested in learning more, I recommend watching the free webinar – the 2019 Gold Rush – that my friends at Stansberry Research are hosting tonight at 8 p.m. Eastern time. The event features legendary gold expert John Doody, who Jim Grant – publisher of the excellent Grant's Interest Rate Observer – has called "the gold-mining authority."
You can save your seat for this free event here. Who knows? Maybe you'll be the one lucky viewer who wins more than $20,000 in gold coins, just for tuning in! (Four others will win coins worth $1,600 each.)
2) Lumber Liquidators (LL) popped as much as 9% this morning on news that Tom Sullivan, the company's founder and former chairman and CEO, bought $10.6 million of the stock, increasing his stake to 6%.
I'll share my full analysis of what this means in the August issue of the Empire Investment Report – out this evening after market close – but it's clearly good news for long-suffering shareholders. The company is struggling right now, so who better to help fix it than the guy who built what was once a highly profitable growth machine?
3) Kudos to David Berman of Durban Capital, whom I quoted in Monday's e-mail, saying, "I expect more carnage in the next two weeks among smaller retailers as they report earnings – though I think Target (TGT) will be fine."
Sure enough, Target reported blowout earnings and gave strong guidance, and shares are up about 20% today.
4) I was shocked to see that Walmart sued Tesla yesterday: Walmart Says Tesla Solar Panels Set Fires Atop Stores - New York Times. Excerpt:
Walmart is suing Tesla for breach of contract, contending that at least seven rooftop fires at the retailer's stores between 2012 and 2018 were a result of problems with solar panels installed by the company.
The complaint asserted that Tesla engaged in "widespread, systemic negligence" and "failed to abide by prudent industry practices in installing, operating and maintaining its solar systems." It said the panels were installed on the roofs of more than 200 of the 5,000 Walmart locations in the United States.
To be clear, I'm not at all surprised that the Tesla/SolarCity panels and/or their installation and maintenance are crap... Rather, it's that disputes like this are almost always settled out of court. Why would Tesla go to war against one of the largest companies in the world and open itself up to charges like this from the lawsuit?
On information and belief, when Tesla purchased SolarCity to bail out the flailing company (whose executives included two of Tesla CEO Elon Musk's first cousins), Tesla failed to correct SolarCity's chaotic installation practices or to adopt adequate maintenance protocols, which would have been particularly important in light of the improper installation practices. [Here are more excerpts from the suit.]
That Tesla didn't settle is a sign of two things, I suspect. One, CEO Elon Musk rarely acknowledges bad news or mistakes and instead tries to hide problems. And two, Tesla is in a precarious financial position. When you're losing money hand over fist and cash is tight, maybe it's rational to get sued and pay more, as long as you can delay the payments by a year or two – and perhaps also discourage other customers from demanding refunds/remediation...
For additional commentary, I recommend this Twitter thread.
Best regards,
Whitney
