More Timber

When my recent post about Plum Creek Timber (a client holding) was run on Seeking Alpha, a reader left the name of a stock I had never heard of before; Timberwest Forest (TWF-UN.TO in Canada and TWTUF on the pink sheets).

Timberwest is one of these Canada listed products that ties in with some sort of resource and pays an enormous dividend, the hydro funds fall into this category.

The chart (click to enlarge) goes back a year and compares Timberwest with Plum Creek Timber (PCL) and Macquarie Infrastructure (MIC), which is also a client holding. Timberwest and Plum Creek are obviously both timber companies and Timberwest and MIC are both not so simply constructed businesses with high dividend payouts.

An investor who bought MIC or Timberwest at the wrong time may not have necessarily known that this sort of stock would have gone down in this manner perhaps in conjunction with the financial sector so just owning one of these in moderation is not a big deal. If one of these are down chances are something else is up.

I do think an investor could realize what MIC and Timberwest have in common and realize that they might go down together even if they did not know when they would go down or understand what would take them down.

Comments

[d_teller:]

MIC and TWTUF don't have much in common, except for current pricing...TWTUF, which I bought several years back, and MIC, which is only 2 years in my portfolio, are uncorrelated. There are other, more obscure timber companies, which are even more volatile, with holdings in the Minnesota area.

I have a position in MCQRF, MFD, MIC, PCL, MGU, and other "uncorrelated-with-U.S... securities", and they pay me to hold their risk. I mentioned TWTUF, because it is a "stapled security", paying part income from the bonds, and part dividends from its timber (down) and land sales (up) on Vancouver Island.

If you want a steady performer, you might look at ATPWF, which is a Canadian Royalty (ATP/UN.TO), with income from U.S. operations, and which will not be affected by the Harper taxation plan, because its income is Not from Canada ...and it pays a monthly dividend >> PCL or any of the Macquarie infrastructure funds. I would wait for a slow price drop to buy below $9.80, for a >10% yield.

I'm not suggesting anyone buy any of these now.

2008 Jun 05 03:56 PM

[d_teller:]

I had to go to the "Pink Sheets" to compare PCL to MIC,MGU, MFD, MCQPF and MCQRF...and if one had been prescient enough to have purchased NEWL (the obscure MICHIGAN timber company) back in 2000 or 2001, its gain (trades around $200, now) would have put PCL and all the other "newbies", to shame.

But I ran correlation analysis on PCL, RYN and the infrastructure securities I listed and the max is 0.27; in addition, it depends on the time period chosen for comparison...the last 6 mos. have shown PCL's price/share is growing better than the Macquarie funds NAV's....but their dividends are much higher...and if you go back a few years with stockcharts.com performance comparison, I guess who wins is based upon the starting date.

Finally, with a security that pays dividends, you have a choice to reinvest or buy addl. lots when the price is down. I prefer the latter.

2008 Jun 05 09:40 PM

[d_teller:]

Sorry, it's NOT NEWL, but KEWL.PK = the Keweenaw Land Holding Co., Ltd., which pays a minuscule 82 cent dividend...and I don't purchase low-paying dividend securities. c.f. SA.com/mb/topic57788-e... -keweenaw-land-association?...

2008 Jun 05 09:53 PM

[Roger Nusbaum:]

thank you for all the added value to this post

2008 Jun 05 11:31 PM