Land/forestry investment?

[Brat]

The names of the forest real estate firms was not a recommendation, it was simply information. Years ago I did consider the Pope & Talbot entity (I knew two Pope executives who were excellent) but invested in index funds. The problem with wood products/forestry, like the shipping industry, is that the business is cyclical and subject to ever changing environmental regulation.

Disclosure: I am a native Oregonian and grew up during the zenith of the wood products industry. My grandfather was a partner in a sawmill in Oregon (he died when I was very young). The most profitable wood products businesses are privately held.

[target2019]

Quote:

Originally Posted by 2Black Regarding Weyerhaeuser, thanks for the tip, what i understand its a stock (ticker: WY) but to be honest I’m not impressed by it. It crashed in 2008 like all others but spy did a far better job if you compare the last 10 years or so.. Even with dividend taken into account, you may be better of with spy.

SPY is usually much better than one bet. Forestry is a 30-year investment, I believe.

[Brat]

Unless you can find land with harvestable timber ripe for development.

[nwsteve]

Quote:

Originally Posted by 2Black Hi guys, Thanks very much for all the replies. Interesting to read. So most advice is to stay away from it. With some who made a profit, mainly I think because of trust/knowing a friend, etc… Regarding Weyerhaeuser, thanks for the tip, what i understand its a stock (ticker: WY) but to be honest I’m not impressed by it. It crashed in 2008 like all others but spy did a far better job if you compare the last 10 years or so.. Even with dividend taken into account, you may be better of with spy. Again thanks for the replies!

Actually owning Weyerhaeuser or any other the timber REITS is a great but conservative way to participate in the long value of timber assets. Plus from WY you are getting a 3.3%+ dividend without all the asset risks of actually owning the asset directly. Also important to appreciate timber is a unique asset that actually compounds in volume and value every year. Most assets depreciate and loose value. Universities and pension funds really like timber as an asset class for their portfolios due to its unique properties
I worked 20 years at WY early in my career and have followed since. The WY of 2017 looks nothing like the 2008 version. In 2008, WY had significant operations in pulp and paper as well as a 6 major home building companies under the umbrella of Wey Real Estate com. Since the new CEO took over, all the assets but the timberland and wood product mfg/distribution are now gone.
Weyer is now the single largest private owner of timberland in the US. Also of note is their timberland quality is exceptional in terms of growth capacity and geographic diversity (major blocks in the W Canada, US West, So Central, SE, and NE). Certainly not going to compete with the FANG stocks but does offer a low beta, reliable vehicle for accumulating long term appreciation while paying an above average dividend.. There are more detail reviews of the company on seekingalpha.com

[AndyS]

Quote:

Originally Posted by Breedlove I have a small timber farm Pine trees . Greatest thing I ever did. I get a fantastic Ag exemption , lots of good management and planning help . Like I said mine is small a very good friend of mine has 3000 acres in Mississippi and he loves it. Not a lot of work and with the small not a lot of money . But we really love ours. You can go to the county court house and find recommended foresters and they are not expensive.

Here's the only personal experience I have knowledge of.

When my Dad passed away some 20 years ago my brother, sister, and I all lived States away from where we grew up in Mississippi and all of us knew we would not be moving back there. To simplify splitting up the estate my brother offered to buy-out my sister and my shares of Dad's 70 acre farm, which at that time was about 30% timber. My brother had the rest of the land set out in pine trees.

A few years later he bought an adjacent hundred or so acre parcel at a "right price" that came up for sale from which all the timber had been cut on & had pine trees set out on that. Doing this several more times over the years whenever a nearby parcel came up for sale "at a right price" he acquired about 500 acres altogether and all currently set out in pine trees in various stages of growth.

He's pretty much managed the whole thing himself all this time. He also benefits from always having had a very good paying job combined with a modest lifestyle that allows him to have cash to throw at this "investment" when needed or desirable. He recently had a "thinning" done, (necessary because he was getting pine beetles in some of his timber), from which he profited a sizeable sum. Whenever he does start having his timber cut in large quantities on all of the land he'll have a really big payday.

But mind you ... he's been in this "investment" over 20 years, with few paydays. So yes, it can be profitable if done correctly. But it's a long term investment. Very long term.

[MRG]

Quote:

Originally Posted by Winemaker DMIL worked for state forestry for years; I had asked for advice about buying land to plant black walnut 35 years ago. The folks she hooked me up with persuaded me not to get into the business; they were just barely making money on family owned land. Presently around these parts, loggers come in and look at timber that will be in right of ways for gas and oil pipelines, to get the quality lumber. Then when the pipeline timber men come through, they buy up what is cut down and sell/dispose. Currently, timber prices are low because of supply glut.

Good choice in staying away.

The walnut mill I worked at in the 70-80s owned half a logging company. In early 1980s the average price they paid to the landowners for black walnut trees on the stump was $55.00 apiece! There was ~10 million board feet included in the stats.

This included the veneer harvest. Your not going to grow veneer logs in a lifetime.

[flintnational]

I will give my answer up front and then provide my reasons. I would stay away from direct timber investments.

I have followed southern pine timber land for more than 30 years. I like to hunt and have always tried to justify a timber land investment. The best I can come up with, is the data may support that long term timber returns (if the land is purchased at a reasonable price) matches the stock market's returns. However, even if you can hypothetically get market returns, timber has these limitations-

1) requires specialized knowledge
2) it's illiquid (at least the land is)
3) it's not diversified (at least for small investors)
4) lifestyle purchases have greatly increased the price of small tracts of land

Pension funds and endowments use timber to diversify and that may make some sense. But they are large enough and can overcome the limitations mentioned above.

FN

[Jerry1]

I don't know how good of investment it would be, but you'd be in good company.

Who are the top 10 land owners in the US - Business Insider

Note the last line of the article:

"Productive land is one of the very few permanent values throughout history," Malone said.

[2Black]

Regarding Weyerhaeuser…
First of all i’m terrible at picking individual stocks, that is why I stay away from it (even how tempting it is from time to time…)
Also I believe in owning land and forestry, I like the idea of things growing (trees ;-) I don’t mind it takes 10 or 20years.
But even if Weyerhaeuser owns land which I agree is a good thing, if you buy stocks, you still own stocks not land..

I agree that buying some land, have threes planted, and manage it all is too much work for me (and I don’t have the knowledge nor time)
So that is why I was wondering if here are Forest Management Companies that take care of that, sort of in the same way with landlords…
I once read that a group of people start a company (where they each get stocks) and an overlooking Forest Management Company handles all forestry tasks (do what you are good at) and after 10 or 20 years after harvest the money is devided back to the stock owners and that company dissolved.
Best combi would be with a secondary market where you can sell (part of) your stocks of that particular ‘forest company’ to others before harvest.

Back to Weyerhaeuser vs SPY
Anyway, just for fun I downloaded some historical data from yahoo finance and compared WY vs SPY
I don’t know when the new management entered so I put both 20years and 5 year data in a chart.
If I’m correct the ‘adj. price’ column in yahoo is where dividend is included (?)

If you like the excel sheet, send me a message.

Will try to get some images below, not sure if that works...

https://s8.postimg.org/7no807oed/WY-vs-_SPY-20_Y.jpg

https://s8.postimg.org/6qme4x9xx/WY-vs-_SPY-5_Y.jpg

[haha]

Quote:

Originally Posted by nwsteve Actually owning Weyerhaeuser or any other the timber REITS is a great but conservative way to participate in the long value of timber assets. Plus from WY you are getting a 3.3%+ dividend without all the asset risks of actually owning the asset directly. Also important to appreciate timber is a unique asset that actually compounds in volume and value every year. Most assets depreciate and loose value. Universities and pension funds really like timber as an asset class for their portfolios due to its unique properties I worked 20 years at WY early in my career and have followed since. The WY of 2017 looks nothing like the 2008 version. In 2008, WY had significant operations in pulp and paper as well as a 6 major home building companies under the umbrella of Wey Real Estate com. Since the new CEO took over, all the assets but the timberland and wood product mfg/distribution are now gone. Weyer is now the single largest private owner of timberland in the US. Also of note is their timberland quality is exceptional in terms of growth capacity and geographic diversity (major blocks in the W Canada, US West, So Central, SE, and NE). Certainly not going to compete with the FANG stocks but does offer a low beta, reliable vehicle for accumulating long term appreciation while paying an above average dividend.. There are more detail reviews of the company on seekingalpha.com

I lived for a time in Washington coastal timber country. Like some have said above, the public ally traded timber companies have changed mostly from timberland to paper and lumber products to growing trees and in the case of WY also wood products. Most are like WY REITs with perhaps a taxable subsidiary or two. One very small outfit here in WA Pope Resources is an MVP. I agree with the poster above, all stocks have risk, but good timberlands on favorable locations are not far from bulletproof.
I am only attracted to companies with a majority of holdings in coastal NW or us southeast. Pretty rapid turnover of those pine trees down there. IMO WY deworsified with the merger with plum creek. I don't really want New England or upper Midwest or Rockies timberlands. Still, these are a minor part of today's WY.

Ha