Friday, September 23, 2016

Why Was Weyerhaeuser Up 5.7% Yesterday? Because Goldman (WY)

$32.21 up another 12 cents.
As a REIT WY is paying out most of the cash flow, currently trading to yield around 4%.
From Barron's Stocks to Watch (yesterday):
Weyerhaeuser (WY) wouldn’t normally top your list of big movers, let alone the biggest mover in the S&P 500. But thanks to a note from Goldman Sachs today, Weyerhaeuser was the hottest stock in the S&P 500.

Shares of Weyerhaeuser, which has a market capitalization of $22.7 billion, gained 5.7% to $32.08—its largest move since February 2012—while the S&P 500 rose 0.7%.
The big gain was inspired by Goldman Sachs analysts Brian Maguire and Kia Pourkiani initiating coverage of Weyerhaeuser with a Buy rating and adding it to the firms Conviction List, citing its “leverage to the housing recovery.” They explain:
A rebound in housing combined with new duties on Canadian lumber imports and the lasting effect of the pine beetle epidemic could create a SuperCycle for housing-related Forest Products stocks (Boise Cascade (BCC), Weyerhaeuser), driving 70%+ upside to EBITDA…

If interested see also last year's "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....
"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" 
And quite a few more, use the search blog box for more.