Originally Posted by brewer12345
IP is an ideal issuer to grab junk bonds from when the junk market blows up. There is tangible asset value in the timberland, so if it implodes and files for bankruptcy creditors have an asset to look to. The equity? Mysteries abound.
This is no longer true. At one time IP was the largest holder of southern pine in the world, but they sold 6ml acres in 2006 and sold some of their northern forests soon after. I believe they had another sale in 2009. So now they are essentially a fiber processor and marketer. Their 2010 10K reports ownership of 250,000 acres of forest in Brazil.
From 2010 10k:
ITEM 2. PROPERTIES
As of December 31, 2010, the Company owned or
managed approximately 250,000 acres of forestlands
in Brazil, and had, through licenses and forest management
agreements, harvesting rights on
government-owned forestlands in Russia. All owned
lands are independently third-party certified for sustainable
forestry (under operating standards of the
Sustainable Forestry Initiative (SFI™) in the United
States and ISO 14001 and CERFLOR in Brazil).
When they sold their 6mln acres of pine in the US south, they essentialy left the tree growing business, and became an industrial fiber processor, buying they pulp and chips from 3rd parties.
It may or may not be a good investment, but it is no longer a timber company.
The creme de la creme of US timber in public hands is Weyerhaeuser. It is now a REIT, but unfortunately it is also burdened by home building and forest products ( mills, etc) businesses which are very tied to US hombuilding. So it may lose it's dividend.
Overall, US timber ownership is transitioning from integrated forest and products companies, to timberlands being owned by partnerships, wealthy foundations and universities such as Harvard and Yale and other non-operating entities.