Lumber Liquidators Holdings, Inc. (LL)

So far, my favorite part was when Chawls warned that there was "significant" risk that the sales/margin/etc. might not keep up with the growth in SG&A.

As if cutting SG&A was utterly unthinkable.

Which it is, as long as he's there.

Just to repeat myself for any muppets new to LL that might be bottom fishing and just noticing the new 52 week low and thinking of taking a chance at this price.

Don't do it. This has been a easy business to run since the formaldehyde debacle -- strong housing, low rates, general economic growth. And even during Covid, this was one of the few industries that experienced almost normal sales. And through it all, this management team drove the price from $40 to last month's $10.

But for a few weeks now we've been in a recession combined with increasing mortgage rates reducing housing. I don't think any of us can imagine how bad a job they will do when they don't have the massive tailwinds they've wasted for these past six years.

I wouldn't touch it at today's $8, or $4 or $2. But I'd buy it for up to $15 if the founder Tom Sullivan announced he had taken over the company. (And not just pretended to to raise a little pocket money, like he did 3 years ago to pay off this management's nuisance suit over the last few month's of a non-compete agreement.)

On a previous comment I referred to LL as a "sticky-trap" for investors. That comment has somehow been removed, possibly because of one of you complaining. So thank you for all you do, but I don't like having my speech cancelled.

So yes, LL is a sticky-trap, and like a roach, the more you trade to get out, the more you get stuck.

Like a wolf I had to chew off my leg to get out. More like two legs.

Don't go there, at least not until management changes.

Monthly real estate numbers come in this week. Today we had NAHB housing index come in at 55 vs. 66 expected and 67 last period. Housing permits and starts tomorrow, 7/19. On Wednesday: at 7:00 we get Mortgage rates, applications and indices for purchases, market, and refinancing; at 10:00 is Existing Homes sales. Then on Tuesday, 7/26, we get the House Price Index at 9:00 and New Homes sales at 10:00, followed by Pending Home sales on Wednesday, 7/27, at 10:00.

Not sure what all that may tell investors. The website is sticking with 10% off discounts as of this morning, whether that's all "whistling through the graveyard" before worse news or simply all the discounting they need to keep the wheels of industry humming won't be known for weeks.

If I left the party too soon it won't be the first time. Funny thing is, I'd buy in at $15 tomorrow if Tom Sullivan were to throw out these sponging posers. I'm sure whoever's in charge, (above Richmond) is setting up something.

There's a railroad strike likely in a few weeks offering some nice fluctuations followed by an inflationary signal for more raises and spending -- Now if I could only think of some financial heavy hitter who owns railroads ...

This fine Friday morning, July 29, LL's stock price seems comfortably on the verge of leaving behind single digits and taking its rightful place, onward and upward, as Powell's steely hand at the helm, stands ready to stare down inflation, with just the weensiest hint of recession. Flooring specifics, like mortgage rates, home sales and prices, and workforce participation are all moot. ("Moot, I say! Moot!")

But on a purely tactical note, (not technical, because I'm not smart enough to look at a chart if the plot is upside down or backwards), there were 560 puts traded yesterday, deep out of the money and for the longest listed Januaries of 2023 and 2024. What was interesting is that every one of those trades was closing an open contract, settling up an obligation to buy rather than merely passing it along to someone. So someone who previously promised to buy LL at $3 and $5, perhaps to limit their risk from a short position, decided to buy back that obligation to buy. This rather than wait six months or a year and half for the calendar and the previously mentioned onward and upward scenario to drive the market price of their obligation to buy 56,000 shares to zero. So they used yesterday's uptick to back out of their commitment to buy LL at half off and 70% off today's price (the $5 and $3 strikes, respectively.

Should an average-Joe, muppet investor like us be worried that someone with the money to have promised to buy $500,000 worth of LL today, but only if it drops to $200,000, no longer feels comfortable with that committment, and is willing to pay $9320 to get out of it? I don't know. But whoever held the other end of that promise now no longer has someone guaranteeing their shares of LL won't drop to $5 or even $3.

You can look up options in detail for one day back at CBOE's site, if interested.