I have been a fan/holder of Plum Creek Timber (PCL) for clients since before I started this web site. I've written about it a few times over the years and I just continue to hold it.I've known about the stock going back to my days at Lehman Brothers from 1989-1991 when it was still an MLP.
I think I first read about the diversification benefits of timber/lumber sometime in the mid 1990s.
The chart shows PCL in blue compared to Rayonier (RYN) in red and the S&P 500 over the last year. In the last few years PCL has had periods where it has been ahead of RYN and periods where it has lagged RYN. Ditto the S&P 500.
What I think is important is that in the last 12 months while SPX has dropped about 10% PCL is up about 10% plus it has paid a decent dividend. If I had had RYN instead it would have delivered almost the same effect.
Most of the time PCL doesn't do a whole lot but this has been a period where holding it paid off. That it might lag at other times, like maybe if the stock market is doing very well is ok too. The reasons to hold it are for the dividend and the hope it can zig when equities zag.
If you own stocks or other products that you hope deliver what PCL has done over the last year you should realize there will be periods where it is dead money but assuming the story has not changed it is likely that selling out because it is dead money for a while will likely turn out to be a mistake.
6 comments:
OT perhaps: Did you see 6-1-8 Wash.Post Biz.section article on Danville, VA's attracting IKEA for furniture fabrication, specifically the big seller bookshelves because it "costs more to transport finished good than make the item". (Article did not specify original production country.) (Since that decision, a Polish IKEA supplier has or is to open a mattress factory there also.) Is this an exchange rate story, a supplier getting closer to growing end markets? Any thoughts? Impact on PCL, RYN, etc.? I found it interesting, as perhaps indicator that some off-shore inflation might be offset by value of our timber & workforce. Bee
did not see that news. the reversing of outsourcing because to the weak dollar has popped up every so often in the last couple of years so in a way this could be an evolution of that.
To the extent this is an energy price story it seem odd that a company would build a factory because if energy goes down...
As you have relayed the story I take it as more of a long term thing that the believe the US will demand their value priced merchandise longer term and that the most cost effective way to produce it is by setting up shop here which has mixed implications for their call on the US but could be good locally if it is a net creator of jobs.
Thanks. Your perspective reminds me these aren't high value assembly plants.
For as long as a single man is forced to cower under the iron fist of oppression, as long as a child cries out in the night, or an actor can be elected President, we must continue the struggle!
Roger,
Any thoughts about the rlative merits of PCL v. Rayonier? ARe they essentially two sides of the same coin as it seems to suggest from the chart or are there inherent differences that speak to the relative merits of one over the other?
i am under the impression that RYN has NZ exposure which could perceptually cause a drag but I am not sure.
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