Lumber Liquidators Holdings Inc. LL gained more than 12 percent Tuesday after a major shareholder increased its stake and a well-known short seller separately questioned recent negative reports about the company.
The flooring retailer changed hands recently at $31.55, up $3.60 (12.8 percent); The shares are off about 40 percent since a "60 Minutes" news report alleged that some of its products fail to meet California emissions standards.
The company has disputed testing methods used by "60 Minutes."
Blackrock Inc. boosted its passive stake in Lumber Liquidators to 10.1 percent from 4 percent as of December 31, according to a filing Tuesday.
Separately, short seller Citron Research drew attention to the California Air Resources Protection Board, which recently counseled consumers against ripping out flooring that may fail to meet state standards "unless there are noticeable health effects."
"Citron has many times been on the wrong side of thinking that a company is going out of business," Citron said. "We're not falling into that trap this time."
The state said emissions generally decrease as the product ages, and can be handled in the mean time with proper ventilation.
Citron noted that short interest currently amounts to about 34 percent of Lumber Liquidators' public float.
"A somewhat moderate sales impact and lower-than-expected settlement would result in a substantial recovery" in Lumber Liquidators' share price, Citron said.
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