Shares of Lumber Liquidators (NYSE: LL), the maker of hardwood flooring and related products, are off more than 20% today on volume that is already more than 10 times the daily average after a “60 Minutes” report claimed the company’s China-made flooring is unsafe.
The “60 Minutes” report, which used undercover reporting and hidden cameras, found that flooring made by Lumber Liquidators contained excessive amounts of formaldehyde. The report also “found that flooring was billed as meeting California health and safety standards even though it didn’t. Video showed managers at three Chinese factories admitting to using false labeling that made it look like the products met regulations,” according to Bloomberg.
That is enough to make Lumber Liquidators one of the worst-performing stocks in the U.S. today, but the exchange traded funds with exposure to the stock are holding up.
For example, the SPDR S&P Homebuilders ETF (NYSEArca: XHB) is continuing its recently torrid pace today, trading modestly higher in the wake of the Lumber Liquidators imbroglio. The $1.9 billion XHB is the only ETF with exposure to Lumber Liquidators that can be considered notable.
Lumber Liquidators accounted for 2.5% of XHB’s weight as of Feb. 27, making the stock the 30th-largest holding in the equal-weight XHB. The ETF is home to 37 stocks, none of which has a weight in excess of 3.56%. [Short Covering Help for Homebuilders ETFs]