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George Nichols

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  • CUT vs. WOOD: Timber ETFs Square Off [View article]
    I respectfully disagree with your assessment, Michael. I've written extensively about timber investing (and calculated correlation stats) on Seeking Alpha (see my profile), and in greater detail at my site:

    You made the common error of conflating the two unrelated concepts of: 1) timberland as an asset class (i.e. what Harvard and Yale have owned) and 2) sector bets via forestry stocks.

    The stark differences in their downside-correlation profiles were shown in 2008. The NCREIF Timberland Index generated positive returns, while CUT plunged roughly 48.7%.

    It's an apples-to-oranges comparison that retail investors often make, which unfortunately causes them to lose their shirt.

    Speaking of which, the news Roger is alluding to is the recent high-profile collapse of Australian entities Great Southern Group and Timbercorp. Many retail timber investors were largely wiped out.

    The author's assertion that retail investors now have access to this formerly "forbidden" asset class is highly premature.
    Jul 4 11:21 AM | 2 Likes Like |Link to Comment
  • Potlach Spinoff: Curb Your Enthusiasm [View article]
    Aalan, as I noted, the revenue is primarily from manufacturing. In the space of my article, I didn't overwhelm readers with the full quantitative details, but here's the non-timberland revenue breakdown for you:

    Pulp & Paperboard (35.3%), Wood Products (24.4%), Consumer Products (23.4%)

    While of course timberland revenue % varies from year to year, the swings aren't dramatic. PCH's timberland-related revenue made up 17% of sales in the poor housing market of 2007, but a near-identical 18% in the strong housing market of 2005. Hence, at various stages of the economic cycle, PCH has primarily been a manufacturer rather than a timberlands manager.

    In your response to my previous article, you said you're interested in (or even own) PCH as a timber play. My goal isn't to criticize PCH or encourage shareholders to sell the stock; rather, to give shareholders a better understanding of exactly what they own.
    Jul 19 07:47 AM | Likes Like |Link to Comment
  • How 'Timber-Like' Are Timber REITs? [View article]
    Thanks for your feedback on my article! I agree that there is no single metric that definitively quantifies the "purity" of a timber REIT. Investors should consider many data points (income, revenue, etc) over various time periods (latest quarter, year, and several years). In the space of my article, I just focused on a couple of metrics I considered most relevant.

    Naturally, annual revenue % data varies from year to year, but the swings generally aren't dramatic. As someone noted, 2007 was marked by a poor housing market; but as I note below, sales % didn't vary dramatically during the strong housing market of 2005:

    '% timberland-related revenue, 2007 -> 2005 : PCH = 17% -> 18%; RYN = 28% -> 25%; PCL = 71% -> 68%.
    Jul 9 01:48 PM | Likes Like |Link to Comment
  • Adding Wood to Your Portolio: A Worthwhile Investment [View article]
    Professor Enke, thanks again for your writeup on my timber article! I'm glad it was worthwhile reading. :)

    Thanks, Rudi. What were the start/finish dates for your correlation period? Regarding your question, historical lumber prices are available, but my correlations were based on the NCREIF Timberland Index. It reports returns of selected TIMOs (timber investment management organizations) on a quarterly basis.

    Xmplary, interesting point. There are certainly environmental and aesthetic ramifications to consider. Just from a carbon standpoint, I'm told harvested trees may release *some* carbon back into the atmosphere (versus all of it from naturally decaying deadwood). And, as the other poster noted, areas harvested by timber managers are almost always replanted, which creates future carbon sinks.

    On a related note, carbon credits are starting to make up a small, but significant, portion of investment returns for a few timber managers.

    - George
    Jul 6 09:58 AM | Likes Like |Link to Comment
  • Timber ETFs...Without the Timber? [View article]
    Thanks for all of your comments and your kind words regarding my article! I'm glad I can help investors avoid the pitfalls I mentioned.

    In the next week or two, I'll publish brief, follow-up articles on: 1) timber REITs and 2) Potlatch's proposed spinoff.

    While timber REITs are generally the most viable options for investors, I'll explain why investors shouldn't go so far as to assume that these stocks will perform as reliable substitutes for direct forest ownership.
    Jun 30 08:26 PM | Likes Like |Link to Comment
  • Three's Company: SSgA Launches Third Global REIT ETF [View article]
    Good article, Murray. Two things to note:

    1) We have a conversation thread on global REIT trends, and we're discussing your article, at the Bogleheads/Diehards forum:

    2) The "See related story" part of your article lacks the link to your accompanying article from yesterday at

    - George
    May 13 09:54 AM | Likes Like |Link to Comment