Monday, November 9, 2015

Timber: "Weyerhaeuser is buying Plum Creek for $8.4B to form timber giant" (WY; PCL)

We have quite a bit on timber but a big caveat up front: this stuff take more effort than your typical equity purchase. On the other hand the long term (200-yr.) record is pretty good and cash flow with a bit of an inflation hedge is a nice combination.
From our intro to 2012's A Fine Time for Timber" (WY):

There are a half-dozen ways to invest in timberland, the REIT's being one of them. Unfortunately for non-institutional investors there are no pure play portfolio investments and neither the ETF's (CUT; WOOD) nor the REIT's are perfect proxies for timber. POPE Resources is set up as a Master Limited Partnership with a higher correlation to timberland. A couple of London traded vehicles, Phaunos Timber and Cambium Global Timberland Limited also have higher correlation to timberland.

If you can do direct investments the Timberland Management Organizations (TIMO's) will get you even more correlation with Forestland Group (3.5 MM acres) Campbell Resources (3.1 MM acres)  and Hancock Timber Resources Group ( 6.5MM under management) being the largest.

Plum creek is up 16.6% on the day, Weyerhaeuser down 2.91%.
From the Seattle Times
Weyerhaeuser and Plum Creek, two timber-owning enterprises deeply rooted in the Pacific Northwest, are merging to form what they call “the world’s premiere timberland and forest-products company.” 
Weyerhaeuser is buying Plum Creek for $8.4 billion to form the nation’s largest private owner of timberland, the Seattle-area firms announced Sunday. 
The combined company will own more than 13 million acres of U.S. timberland and have a market capitalization of $23 billion based on current prices, ranking it sixth among publicly traded companies based in Washington state. 
“We saw a unique opportunity to combine the two industry leaders in a way that will generate substantial value for shareholders by creating the world’s premiere timberland and forest-products company,” Weyerhaeuser CEO Doyle Simons said in an interview Sunday.
Plum Creek chief Rick Holley will become the company’s nonexecutive chairman, while Simons will be president and CEO. 
Analysts said it’s an epic consolidation move in an otherwise fragmented industry....MORE
 See also:
"Investing in Timber and Farmland"
Largest Public Employee Pension Plan Seems Lost (plus a primer on timber investing) CalPERS
Alt Assets: "US timberland prices gain, despite lumber slowdown" (PCL; WY; RYN; CTT; PCH)
Soros Buying Into Real Estate/Real Asset Investment Management Biz
Too Greedy to Quit, Too Chicken to Steal: "Bypass Wall Street"