Cramer didn't say he hated the stock on Mad Money. He didn't say anything one way or the other because he knew it's a powder keg if you go short and you're wrong. There are already numerous cracks in the argument that LL was selling any unsafe problems and that is the predominant theory supporting a short position.
Looks like we're seeing green shoots again today. I'm surprised considering the bounce we've already seen over the last few days.
I watched their report too. Independent testing concluded that 3 tests came back in the "low" range for WHO and CDC guidelines.
This also proves that LL test kits were legitimate.
If LL is exonerated from any wrongdoing this could be a home-run for longs.
Margins will be weaker, Cost will be higher, you're correct about that on a sequential and YOY basis. The share price is also dramatically lower sequentially and YOY though...
If there isn't a dramatic decline in revenues though, it will imply that the muckraking on 60 minutes didn't have a big impact on the customer's perception about LL.
We shall see.
At least there was a window of opportunity to make a quick buck going long. (Even if it's just on paper because you are holding the long shares)
Maybe a technical issue, but I doubt it. It's possible that the drop was precipitated by stop-loss selling though. I bought a few shares in the $19.08 range. It may have been a dumb move to buy, but I've been buying some small amounts on dips like this trying to dollar-cost average.
I think it's funny that the headline on Yahoo is that Jim Cramer thinks the stock is so bad he won't mention its name. He didn't say anything about the stock, maybe he doesn't feel bad, maybe he knows that it's unpredictable and he doesn't want to make a bad call on the stock so he decided to keep mum.
Just a though.
I don't feel all bad about Tilson. He created a buying opportunity. I wouldn't be a buyer at $50+, but I like the prices from a buyers standpoint right now.
I think you've got a good line of thinking. It's just absurd to expect a retailer to be able to verify safety issues with a product that they don't manufacture. That's no different than making Wal-Mart test the safety of every SKU in the store. It's just absurd.
I really think it's almost unbelievable that LL is responsible for any safety violations (and it's not proven if the Chinese laminates were in violation of any safety regulations at this point)
I really believe that Bullish speculators have precipitated some of the declines too. A lot of long-side buyers that buy hoping for that "dead-cat-bounce" get bored or scared and result in selling pressure for the days and weeks following a big decline.
If LL doesn't experience a big drop in revenues and doesn't see dramatic compression of its margins I think that will indicate that LL hasn't been hurt terribly in the mind of the consumer. That's one of the matters in question, the other being the potential liabilities related to the alleged emissions from the Chinese laminate.
True, and there's no definite proof that the flooring was the cause, people get sick all the time...
The lady that went to small claims against LL admitted that she had seen the 60 minutes special and then decided to go to small claims. She could have just as easily been motivated by buyers remorse or some other factor and saw it as an opportunity to get some money.
I felt the same way about the article. They've got the spin-doctors working full time against LL. The EPA has stated that a negative result could be caused by other sources of contamination and that there is no specific standard. That, in my opinion, is going to make it virtually impossible to make a case for any intentional safety concerns.
Given 60 minutes history of falsified stories I think they have about as much credibility as the National Enquirer. There WILL be a terrific buying opportunity here, the only question is timing, although I think cost averaging a long position will make money here right now.
I think you're absolutely right. I have some buddies that are casual investors (aka. they put some employee stock purchases into a 401k) and NONE of them knew anything about complaints leveled against LL when I mentioned that the stock had dropped a bunch.
The issues here are a tempest in a teapot if I've ever seen one.
Summer is a typically weak time for stocks. There may be some terrific buying opportunities here based on general weakness on the broad indexes alone. Buying the dips here.
There would have to be some incredibly positive news for that to happen. The short percentage has actually decreased in recent weeks. If LL is proven innocent of any safety violations this could get ugly in a hurry for anybody still short though.
Look at the PE multiple in early 2009. It was high then, but it was also probably the best time to buy stocks during your lifetime. You can't look at a few weeks or months worth of earnings while there are unusual circumstances and then multiple that data by 15x for a true value.
BTW, you might want to cover, all it will take is one positive catalyst for a short position to get ugly in a hurry.
Those may be some valid points, but you could have leveled those arguments against them a couple years ago when LL stock was in the $80 range and climbing.