Lumber Liquidators Holdings Inc (LL) Disputes 'Great Short' Label, Stock Gains

Lumber Liquidators Holdings Inc (LL) is heating up today, after the company contested disparaging remarks from Whitney Tilson

by Alex Eppstein

Published on Mar 9, 2016 at 9:56 AM

Lumber Liquidators Holdings Inc (NYSE:LL) has been hit hard in recent months by concerns over the safety of its flooring. Just yesterday, the stock plunged 15% after Kase Capital's Whitney Tilson called LL a "great short." Last night, though, a company spokesman responded, saying, "It is unfortunate that Whitney Tilson has elected to create confusion in the marketplace."

Of course, Tilson isn't the only one shorting LL. Over 34% of the stock's float is sold short, or nearly five times its average daily trading levels. Analysts are tilted in a skeptical direction, as well, with 10 of 11 handing out tepid "hold" ratings.

On the other hand, option traders have kept the faith in LL, buying to open calls at a faster rate than puts in recent months. Specifically, across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a 50-day call/put volume ratio of 1.65 -- ranking above roughly two-thirds of all readings taken in the past year.

These call buyers -- provided the options weren't purchased by shorts as insurance -- should like what they're seeing today. Lumber Liquidators Holdings Inc (NYSE:LL) has shot 1.5% higher out of the gate at $11.95. However, they remain 31.2% lower on a year-to-date basis, suggesting bears remain in the driver's seat.

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