Lumber Liquidators Holdings Inc. (NYSE: LL) has been reeling recently following an unfavorable news report, and no one has come to the aid of the company until now, when activist investor Robert Chapman jumped on board.

Shares of the flooring giant were driven down recently following a report from the CBS news show “60 Minutes.” In short, “60 Minutes” alleged that the company’s products contained a high level of formaldehyde, a known carcinogen.

To combat this, Lumber Liquidators went as far as filing a Form 8-K with the U.S. Securities and Exchange Commission (SEC) the morning of March 2, claiming that “60 Minutes” used an “improper test method” in its reporting of high levels of formaldehyde. The filing didn’t help the cause and shares continued to suffer up until Wednesday when Robert Chapman got involved.

Chapman has taken a long position in the stock, despite its large fall, approximately 55% year to date. He is the CEO of Chapman Capital. As reported on CNBC, his position makes up about 15% of his fund, Chapman Capital, and is partly comprised of call options.

On CNBC Chapman further commented:

This is precisely the fodder that makes for good investments. You can go through a lot of volatility in these things. There’s going to be a lot of headlines risk for a while. … It’s just the nature of the beast, but it’s that inherent fear that’s baked into these stocks that provides the huge opportunity.

Originally in the company’s statement to the SEC, it assigned blame for the crumbling share price to an attack by short sellers. Think about it like this: maybe short sellers are attacking, but at the same time, the company’s performance has done nothing really to counter the shorts, and the “60 Minutes” story obviously did not help.

Chapman defended his position in Lumber Liquidators targeting what others have said in the past about shorting the stock:

The key part of the short story is that somehow Lumber Liquidators cheated their operating margins by 6% to 10% over the last few years. It really doesn’t make any sense when you look at comps. Home Depot saw their operating margins double from 6% to 12%. Wal-Mart in eight years went from 4% to 6% … and Best Buy’s margins tripled from 1.5% to 4.5%.

Shares of Lumber Liquidators were up a whopping 12% at $33.20 in the last hour of trading Wednesday. The stock has a consensus analyst price target of $55.30 and a 52-week trading range of $27.79 to $108.40.

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