Filed under: Bad news

As Peter Cohan discussed earlier, shares of Lululemon Athletica (NASDAQ: LULU) are down more than 8% today. A New York Times article mentioned that the seaweed content of Lululemon products, which are labeled as being made of 24% seaweed, is actually 0%.

According to newspaper, “The Times commissioned its test after an investor who is shorting Lululemon’s stock - betting that its price will fall - provided Chemir’s test results to The Times.”

Short sellers get a lot of grief, but this story provides evidence of why I respect their research so much. Sell-side analysts operate on a research method based on trust; they generally parrot the claims made by management, and have well-deserved reputations for downgrading stocks after they lose most of their value.

Continue reading Lululemon underscores the strength of short sellers’ research

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This entry was posted on Wednesday, November 14th, 2007 at 9:12 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.