WASHINGTON, May 21, 2015 – Headquartered downstate from the Maven in Toano, Virginia, the already beleaguered Lumber Liquidators (symbol: LL) took another hit today when its current CEO Robert Lynch “Unexpectedly” quit the company today.
The discount wood flooring company reported the surprise news in a hastily turned out press release. Today’s latest negative development follows the abrupt departure earlier of LL’s CFO. That’s always a bad sign in any company in and of itself, unless the CFO’s leave-taking involves a legitimate and planned retirement.
LL has been battered for months by the grandstanding of fund runner and 1%er Whitney Tilson who, in one of the most flagrantly manipulative moves we’ve witnessed in a long time, quietly shorted the daylights out of the stock even as he worked with CBS-TV’s muckraking “60 Minutes” to put together a hit piece on LL.
Tilson (and “60 Minutes”) accused the company of knowingly violating EPA and international “rules” against importing foreign-sourced manufactured wood products (mostly from China) that allegedly failed to meet EPA standards for formaldehyde and other chemical off-gassing.
The company has vigorously disputed these charges. But the grandstanding Tilson has been on an article-writing rampage since then, trashing the company and its stock with abandon in public, often in the pages of online business site Seeking Alpha, whose impartiality in investing information we’ve now begun to seriously question.
Aside from whether or not LL knowingly violated Byzantine U.S. trade and safety standards, we wonder why the SEC doesn’t move against blatant market manipulators like Tilson. These hucksters quietly take big short positions in the stock of their intended victim before mounting a massive public badmouthing campaign that frightens mass quantities of investors to panic out of the company’s stock, making instant megabucks for the short-seller as they head for the exits.
This is bold-as-brass market manipulation, pure and simple. But the SEC continually allows the like of Tilson, George Soros, Carl Icahn, et. al., to get away with these kinds of shenanigans. It’s the kind of easy-money, P.T. Barnum-style fleecing of the public that’s turning 1%ers into 0.1%ers on an alarming basis. If you or the Maven pulled scams like these, we’d have been buried in a Federal penitentiary years ago never again to see the light of day. But these guys get away with it all the time by mounting their campaigns in the glare of the public spotlight, as if daring the Feds to take a punch.
We have no idea whether Lumber Liquidators were bad guys in this situation or not. Tilson says they are. They say they’re not.
It’s also possible that products LL imported from China were in violation of this or that statute, but that perfectly appropriate testing didn’t happen to pick this up. The Chi-coms are generally fairly shading about how they manufacture their goods, and it’s possible that if there is a legitimate issue here, the Chinese manufacturers are the bad guys, not LL.
LL says they’re purportedly legit testing regime didn’t pick any of this up. Tilson and the CBS crew claim that’s baloney.
The whole thing to us smacks of the 2011 EPA persecution of the Gibson Guitar folks, in this case for their allegedly illegal importation of protected exotic woods, which actually appear to have been imported legally. No matter, though. The Obama EPA takes no prisoners and accords no constitutional rights. If they say you’re guilty, you are, and the hell with due process.
Hiding within this kleptocratic treachery is the behind-the-scenes collusion you think only happens in fanciful novels and movie thrillers concerned with corrupt politics and international intrigue. In the current Lumber Liquidators fiasco, in addition to Tilson, you have the background involvement of a London-based NGO (with a D.C. branch in the U.S.) calling itself the “Environmental Investigation Agency” (EIA).
For roughly a decade, EIA has been running crusades on all manner of alleged wood importation evildoing. Lumber Liquidators, which helps people upgrade their houses with always-desirable hardwood floors at a discount price point, is only their latest target.
It’s from EIA info that Tilson apparently obtained his stats, likely leading to his highly lucrative mass shorting adventure. BTW, EIA is at least nominally supported by (surprise!) multi-billionaire left wing international manipulator George Soros, although, as usual, it’s nearly impossible to follow the money, which is channeled to all manner of left wing organizations via impossible-to-trace entities, often associated with the mysterious, Soros-funded Tides Foundation.
Online searches for more information on EIA are massively front-end loaded with positive, direct-from-the-EIA propaganda entries, as you might expect from too-big-for-their-left-wing-britches Google.
As a result, nowhere on the net can you find any information at all about who’s funding these crusading EIA environmental extremists. They claim “public funding” on their own website but, with all due respect, who or what the hell is that?
EIA won a special award from, the U.S. Environmental Protection Agency a few years back, the same rogue Federal government agency that has persecuted Gibson and anyone else they don’t like, often donors to Republican candidates.
Drilling down on both the London and U.S. sites, one quickly discovers they’ve been carefully scrubbed and are utterly devoid of the names and contact numbers of executives or principals in the organization. That’s generally a sure sign that their backers are reliably wealthy leftists and perhaps even some socialist governments. But they don’t want you to know. The media and Google help.
The current Lumber Liquidators flap is an ongoing part of why so many people are disgusted with this stock market. No rational investor, of course, wants to invest in a company that knowingly involves itself in nefarious international dealings. But accusations don’t constitute guilt, at least the last time we looked.
Yet all a Whitney Tilson has to do is take a short position and blast the stock without warning. Blindsided stockholders pay the price of guilt whether there’s any guilt or not. Already off substantially from its highs since the “60 Minutes” attack piece, LL is already down nearly 15 percent Thursday afternoon after the news of its CEO’s exit hit the tape.
The company’s founder and chairman, Tom Sullivan, will step in as interim CEO. But the likelihood is that he’ll have to ride this one out himself if he can. Who’d want to take this job under the current circumstances. Things have been made even worse by the company’s insurers, all of whom have stepped up to the plate to help their customer by announcing they’re not liable for any claims against LL.
We’re sniffing bankruptcy here at some point, but also suspect some kind of political conspiracy. The enviro-freaks are, however indirectly, setting an example here of what happens to a company they don’t like.
Perhaps in our next national election, voters will finally ask themselves if there’s really any future in supporting the causes or the candidates backed by these selfish, vicious, self-righteous and job-destroying Luddites.