Speaking at the Robin Hood Investors Conference in New York on Friday, hedge fund manager Whitney Tilson, founder of Kase Capital Management, alleged that Lumber Liquidators' recent jump in profits could be attributed to the company's allegedly sourcing illegal timber from Russia, according to the Wall Street Journal.
Speaking at the Robin Hood Investors Conference in New York on Friday, hedge fund manager Whitney Tilson, founder of Kase Capital Management, alleged that Lumber Liquidators' recent jump in profits could be attributed to the company's allegedly sourcing illegal timber from Russia, according to the Wall Street Journal.
Lumber Liquidators responded to Tilson in a statement, noting that he did not contact the company prior his presentation. "We have never met with him to discuss our business. Mr. Tilson's presentation is based entirely on his own speculation and the contents of a report released almost two months ago, which we had previously stated contained numerous inaccuracies and unsubstantiated claims."
The report mentioned in the statement is from the Environmental Investigation Agency (EIA). The report was released with a video, which shows footage of undercover members of EIA interviewing Chinese wood flooring manufacturers who launder illegal wood from Russia's Far East forests. The company officials walk them past pallets of Lumber Liquidators' proprietary Virginia Mill Works brand flooring. The men interviewed say Lumber Liquidators' upper management toured the facilities and knew where the wood was coming from and that it was cut illegally.
In his presentation on Friday, Tilson's two-year price target for Lumber Liquidators stock was $53, down from its current price of $103. The same day, the company's stock price fell nearly 12 percent.
Rich Griefner of The Motley Fool, however remains unconvinced by Tilson's argument, writing, "I am aware of no data that supports Tilson's claims. If he has evidence, he certainly didn't include it in his presentation."
