Timber?

[brewer12345]

Aside from directly held land and PCL, anyone aware of other ways to get timber exposure?

 

[wildcat]

Brew, I have looked around quite a bit and no such luck.  Additionally, I have run correlations on PCL with REITs and it doesn't really appear to offer the benefits of holding timber --- pretty correlated to REITs.  Unfortunately, I have found nothing that really offers the true benefits of timber --- very low to negative correl to stocks, lower std dev & reasonable returns.  There was a whisper that iShares was thinking about an ETF (along with other commodities) but nothing has happened.

Edit - Timberwest may offer the most diversification in the timber area --- Canadian company

 

[unclemick]

Exon as to oil? - Then perhaps Weyerhaeuser to timber? Wait for a dip to get div above 4% and skip worrying about correlation.

Then again I'm an old Washington state dude and worked for them summers as a college kid.

But I still look and have never bought the stock - from time to time over the last thirty years.

 

[Brat]

I don't own any wood products or timber stock...

Some months ago I heard that WY was considering a move similar to what became Plum Creek (Pope & Talbot enterprise). I don't see anything on WY's website to that effect.

 

[nwsteve]

Some months ago I heard that WY was considering a move similar to what became Plum Creek (Pope & Talbot enterprise).  I don't see anything on WY's website to that effect. 

While not having the most acres, WY still has one of if not largest standing inventory of timber.  They announced this week further shutdown of some fiber facilities and sale of their composite division. 
As a former employee and still NWesterner, I still know a number of folks there and watch them .  If you track their behavior since Rogel became Prez, you will see several large asset purchases (McMillan Bloedel and Willamette) and a lot of shutting down/sale of operations.  I do not recall one new manufacturing facility being built in last 10 years.  There is a relatively new large outside investor who has suggested their assets are undervalued. 
I would not be surprised to see continued manufacturing asset sales that ultimately lead to them being essentially a timber company.  Quite shift when 20 years ago they were the largest lumber company in the world.
Price today is a bit spendy as their stock usually moves between low 40's and 70's over the business cycle.  Still the yield is not bad and the CFO has made noises about lifting the dividend now that much of the acquistion debt is paid down.
nwsteve

 

[Howard]

HWD.UN/TSE, a company specialising in the distribution of Woods, an Income Trust , it pays monthly distributions.

The Canadian Stock Market has a heavy bias in Gold, Oil, Timber, Metals, buying the Canadian WEB on the AMEX, or XIU on the TSE will give you exposure to most commodities plus an investmnet in the Canadian $, expected to appreciate at leats 5% against US, already up almpst 30%.

Australia, similar situation, their $ has been beaten down, should show some growth.

visit WEBS on the AMEX board for more details.

 

[Brat]

I have a  cuz who is a non-mgt employee at the WY plant in Springfield.  The last I spoke to him he wasn't worried about his facility, but then he has a Alfred E. Neuman personality.  

I see a change in the way the industry manages its timber properties - part for tax reasons (thus the REIT), part because they are in the cat-bird-seat for logs, lastly demands for development.  

How about GP?

Re Austraila: I didn't see may trees we would bother with. NZ, however, has a relationship with the forestry program at Oregon State and has been planting pines and Doug firs. They predict huge demand from Asia.

 

[Gonzo]

Check out Rayonier (RYN)

Gonzo

 

[Gonzo]

Check out Pope Resources (POPEZ)

Gonzo

 

[wildcat]

I can't buy Canadian companies via Vanguard

 

[haha]

I own Timberwest Forest, a coastal BC landowner. They have sold almost all if not all sawmills. The security has an odd structure. I have owned it about 6 or 7 years, can't remember exactly. It pays about 10-12% pa on my cost, and has approx doubled in price. It owns very high quality  but slow growing timber.

Another idea in addition to those already mentioned is Longview Fiber. For may years they have wasted the cash thrown off from their very high quality Oregon and Washington timberlands on their not so hot papermills.

Investors hope that will change; I have finally folded my tent on that one, but it may be just about ready to improve.

In the very long term, hard to imagine doing better than Weyerhauser though.

One thing to remember about PCL is that it has some fairly crappy timberlands in marginal places like Maine. In the US, there are really 2 softwood regions that are any good. Coastal NW, for Douglas Fir and hemlock, and the south for pine. The turnover time in the SE is much shorter, but NW timber for its part has strong market niches.

A southern company to consider (corporate form) is Deltic Timber. It is near its highs now, but it does bounce around a lot.

Ha

 

[wildcat]

Ha -

Isn't Timberwest considered to be the low cost provider in several tree varieties?  If so would this give them some sort of competitive advantage over other timber companies?  Or do believe there is no real operational differences?  Figured you live a bit closer to the timber industry and would be able to offer some insight.

 

[nwsteve]

Ha -
Isn't Timberwest considered to be the low cost provider in several tree varieties?  If so would this give them some sort of competitive advantage over other timber companies? 

Most of the Canadian timber goes by spf (spruce pine fir) and is commonly used as the basic 2 x __ product family called dimension lumber.  It is what is used to construct the framing in most of our houses.
It does not take a long look at where Canada is see any competitive advantage rapidly disappearing with fuel and logistic costs.  US & Canada are in big tariff war with US claiming Canada subsidizes their industry by not selling their timber a fair market auction (they do not auction timber but use a formula instead that is supposely tied to the market value of products to set value of removals from timber grants from the Crown (govt)).
I am not familiar w/Timberwest asset base but would only see them as advantaged if they have significant old growth cedar acreage.  It is all gone in the US.  WY sold the acreage they got from McMillan Bloedel purchase (mostly Vancouver Island) because of greenies and Native American wanting to limit harvest.
If you want a timber asset play, also look at Potlatch and Longview Fiber previously mentioned.  Both are openly discussing converting to REIT structure ala PLC
nwsteve

 

[haha]

Ha -

Isn't Timberwest considered to be the low cost provider in several tree varieties?  If so would this give them some sort of competitive advantage over other timber companies?  Or do believe there is no real operational differences?  Figured you live a bit closer to the timber industry and would be able to offer some insight.

I would say that they are unlikely to have a cost advantage over large companies in OR and WA. They are doing essentially the same thing- tree farming Douglas Fir where it will grow, and some hemlock. They cut mostly second growth. Here is a blurb from their website.

"TimberWest Forest Corp. is uniquely positioned as the largest owner of private forest lands in western Canada. The Company's 334,000 hectares, providing a sustainable annual harvest of 2.5 million m³ of logs, are located on Vancouver Island and predominantly support the growth of Douglas fir forests, a premium species used for structural purposes.
TimberWest runs fully contracted harvesting operations and, with almost 70% of its logging now being done in second growth stands, the Company leads the industry in this segment. "

I would not be likely to buy it today; I bought it manly for low price and what appeared to be a solid land position. I knew I didn't want any damn paper mills! It is no longer as cheap as it was. One good aspect is that cash flow doesn't get dissipated on capital projects. They contract for logging, contract the actual work of replanting, etc. You buy a "unit", which has elements of a junk bond +warrants. IMO, it is a “hold”.

Ha

 

[ESRBob]

This has been a useful discussion for me because I bought PCL wanting exposure to Timber a year ago and it has done very little as timber prices have gone up, so am looking for an alternative. I like the canadian ideas as well as WY, Rayonier and others. Thanks all for these ideas and brewer for starting this thread.

 

[Brat]

Like farming the forestry business is impacted by species and growing conditions.  In my part of the US there are acres planted in hybrid poplars used for paper products.  Return on investment in forestry is complicated.

Add to that the value of the land...

Gonzo, how is it you know about about Pope Resources??

I like Pope but I wonder how much of it is controled by the Pope family? Are their interests the same as other investors?

 

[unclemick]

WY bought the timberland adjoining my modest 20 acre plot in MS from an estate. I gave them permission to build a logging road across a corner of my land a couple years ago and a written 'offer' to 'horsetrade' for a different plot. Unfortunately the letter and contact name went with Katrina.

Now in MO - may try to reestablish contact next year. Stocks are easier.

heh heh

 

[Gonzo]

Brat,

I don't know anything about Pope except what I have read on the net... I do not own any shares of POPEZ but do own PCL. I found Pope by doing a Google search for Timberland Companies!

Here is a link to Pope Resources: http://www.poperesources.com

As for ownership per MSN Money: Peter T. Pope owns 305,525 shares for 6.6% of shares outstanding. Go to MSN Money and enter "POPEZ" for a stock quote, then click on ownership.

The stock spiked up at the end of January into February and since has leveled off! On the 10 year chart it was about the same as PCL and WY but RYN out performed WY, PCL and POPEZ!

I would like to own some RYN but only on a major pullback.

Gonzo

 

[Brat]

Peter T. Pope owns 305,525 shares for 6.6% of shares outstanding.

Thanks. That is a minor interest IMHO.

It is interesting to see the industry adapt to a tight raw materials enviornment.

 

[Gonzo]

Here is another timber company: DEL

Fidelity has a mutual fund Fidelity Select Paper and Forest Products (FSPFX)

Gonzo

 

[Brat]

For those of us with pitch in our veins, particularly a grand child of a mill owner (and great grand child of a Norwegian widow), the changes in the industry mark our aging.  I visited a cousin recently when the subject of Ken Ford came up.  He and I once sat at the same table and I came to appreciate his management skills.  The firm he controlled is closely held, an important employer in southern Oregon.  His passing, however able his successors, is unsettling. 

Other significant players in the industry, such as Hampton, are also private companies.  From their web site you can see that they have made acquisitions to secure raw material resources.  You can also see the the adjustments from big to small log processing (which is happening throughout the business).

A pure timberland play needs to have diverse geographic and species holdings.  A big bonus would be development potential.

 

[boutros]

DLP and RYN... similar to PCL. Let me know the results if you do a correlation study them.

 

[wildcat]

DLP and RYN... similar to PCL. Let me know the results if you do a correlation study them

I haven't done anything with those but if any timber co is structured as a REIT I think it will be correlated to REITs.

 

[haha]

A pure timberland play needs to have diverse geographic and species holdings.  A big bonus would be development potential.

I can't think why. Remember Arcata- as pure as they get, and all western red cedar.

Fast growing southern yellow pine, near markets. Why would you want to dilute your investment and mangement with anything else? Although some of those southern hemishere species like Radiata sure do grow fast, and are close to Asian markets.

Ha

 

[Brat]

Ever heard of the tussic moth or the western pine beatle?

Nature can be perverse.