Whitney Tilson (Trades, Portfolio), founder of Kase Capital Management, gave a presentation recently at the annual Robin Hood Conference. At the conference Tilson laid out his short thesis for Lumber Liquidators (LL, Financial) and InterOil Corporation (IOC, Financial).
Tilson's presentation:
Lumber Liquidators has collapsed
- Amid a formaldehyde scandal exposed by "60 Minutes," the stock has fallen 88% from $115.36 to $13.87 per share.
- Sales and SSS are down double digits, and the company is now reporting losses – trends that probably won’t reverse any time soon.
- The business is likely permanently impaired so it remains a significant short position in my funds.
Lumber Liquidators subsequently collapsed an additional 76%
- Though it had already been cut in half (from $115.36 to $57.63) since my first presentation, it was still a fantastic short, as it’s since fallen another 76% (from $57.63 to $13.87)
- A good lesson on not falling into the “I missed it” trap – you hadn’t missed it.
- What's the definition of a stock down 90%?
- Answer: A stock down 80% that then gets cut in half!
Exact Sciences (EXAS, Financial), my primary short idea, has fallen 61%
- The stock has fallen 61% from $24.22 to $9.39.
- The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued recently is devastating for Exact Sciences’ only product, Cologuard.
- This is the beginning of the end for the company.
- My price target for the stock a year from now is $3, so I shorted more last month ~$10.
InterOil has been more than cut in half
- InterOil has fallen 58% from $86.50 to $36.44.
- This is nothing more than a run-of-the-mill (albeit clever) natural resources promotion (natural gas in Papua New Guinea, of all places).
- After more than a decade, InterOil still hasn’t produced a single MCF of natural gas – and I don’t think it ever will.
- I got fatigued and covered the short – but my view on the company/stock hasn’t changed a bit.
