The Floorboards are Creaking Beneath Lumber Liquidators: Part I

When a firm downgrades a stock after being one of the lead underwriters of the offering, you’re looking at about as clear a sell signal as you can find. That is what happened to Lumber Liquidators (LL) when Goldman Sachs downgraded the hardwood flooring retailer from a buy to a hold, saying that, after the stock’s recent run, LL’s share “trade at one of the highest multiples in [our] coverage universe.”

Even more disconcerting: a private equity company that invested in LL three years prior to the IPO has been selling millions of dollars worth of LL shares in the past few weeks, according to SEC filings.