On Monday, Whitney Tilson, founder and Managing Partner of Kase Capital Management, published a new article on Seeking Alpha focusing on Lumber Liquidators. Despite the huge plunge in the company’s share price, Tilson believes that the stock has plenty of room to the downside and has maintained a large portion of his short position.

Condemning Stories

The major focus of Tilson’s article is interviews he conducted with two former Lumber Liquidators installers, who reveal that the company has had major issues with many of its product lines and has handled customer complaints very poorly.

The first installer worked for Lumber Liquidators from 2011 to 2014 and said that the company pushed manufacturers to produce extremely low-cost and low-quality flooring materials with high water content that caused floors to contract and buckle over time.

“The manufacturer is supposed to season the product for months: take the rough cut, then put in a big room or an oven to decrease the moisture content down to 6%, then put it through the finishing process. But Lumber Liquidators pushed its manufacturers so hard that all of the company’s products were coming in wet: 20-28% moisture content,” he explained.

A second installer confirmed the horror stories about Lumber Liquidators flooring, but added that customers’ complaints were often blown off or deflected by inspectors with questionable motives.

“The inspectors, many of whom are low quality and unscrupulous, side with whoever pays them,” he told Tilson.

Staying Short

Tilson feels…

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