What a month! September was a wild ride for Lumber Liquidators (LL). What was perhaps a generic pump-and-dump by founder and former CEO, Tom Sullivan, was a windfall for savvy volatility traders. Serious stakeholders were left scratching their heads as to what exactly had occurred, and how the underlying value of the company changed.
This article seeks to get the reader up to speed on what transpired in September, what the shake-up means for the company, and why Lumber Liquidators is better off without Tom Sullivan. We will also discuss a few of Sullivan's valid critiques of the company, and how it should move forward.
What Happened
In late August, Tom Sullivan's F9 Investments increased its holdings in Lumber Liquidators by 30%, and expressed an interest in a bid to take the company private, potentially including a merger with his private company Cabinets To Go. Wall Street, clearly no fan of the firm's current situation, reacted with glee, sending shares soaring about 30% on the news.
The Lumber Liquidators Value Committee (LLVC), holding a similar 6% interest in the company, joined the chorus calling for new management and/or ownership. The group is headed by fellow Seeking Alpha contributor Mario Rizzi. Rizzi has been a vocal critic of Lumber Liquidators' current management in the past, so it comes as little surprise that the Value Committee would join Sullivan in the corporate coups.
As the stock rose on the scuttlebutt of management and ownership changes, Sullivan pulled an abrupt 180, calling the stock too expensive and deciding to offload 80% of his shares. The stock price is now around $10, near where it was before all the hubbub began.
Sullivan's Offloading Leaves Us Better Off
It is difficult to assign a clear motive to Sullivan's actions. The knee-jerk reaction is to call it
