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3 Reasons To Put The CatchMark Timber Trust On Your Buying Radar


  • CTT owns wood.
  • Lumber futures are untradable.
  • Reason one: Risk-off sends lumber toward the buy-zone.
  • Reason two: Fed rate cuts will cause demand for wood to rise.
  • Reason three: A juicy dividend alongside the opportunity for capital growth.
  • Looking for more stock ideas like this one? Get them exclusively at Hecht Commodity Report. Get started today »

With risk-off gripping markets across all asset classes, market volatility has increased dramatically. The VIX index, which measures the implied volatility of put and call options on the S&P 500 stocks, rose to its highest level since December 2008 when it moved to 61.62 on March 9. Options are price insurance, and market participants typically flock to the options market to protect positions when risk levels rise.

After the Fed cut interest rates three times for a total of 75 basis points in 2019, the price of lumber began to rise. Lower rates tend to increase the demand for new housing as mortgage rates decline. Nearby lumber prices rose steadily starting in late May 2018 when the price hit a low of $286.10 per 1,000 board feet. In mid-February, the price of wood on the futures market was knocking on the door at the $470 level. The CatchMark Timber Trust (CTT) owns timberland throughout the United States. As of Monday, March 9, the price of May lumber futures settled at $356.70 per 1,000 board feet, 25.3% below the high from February 20.

CTT owns wood

The CatchMark Timber Trust, headquartered in Atlanta, Georgia, strategically harvests its high-quality timberlands to supply lumber to the market. CTT began operations in 2007 and owns interests in 1.5 million acres of timberlands in Alabama, Florida, Georgia, North Carolina, Oregon, South Carolina, Tennessee, and Texas. The Trust has a market cap of $405.085 million and trades an average of 201,877 shares each day, making it a liquid product. The price of CTT shares correlates well with the price of lumber futures over time. In September 2015, the price of lumber hit a low of $214.40 per 1,000 board feet. In August of the same year, CTT traded to a low of $7.90 per share. In May 2018, when the price of lumber reached an all-time high of $659 per 1,000 board feet, CTT shares rallied to a peak of $13.73 in

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This article was written by

Andrew Hecht profile picture

Andrew Hecht is a 35-year Wall Street veteran covering commodities and precious metals.

He runs the investing group The Hecht Commodity Report, one of the most comprehensive commodities services available. It covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (7)

PipelineDancer profile picture
If you liked it 35% higher last week, do you like it even more now?

And risk of debt rolls and default? If the credit market dries up will they get in trouble, especially if demand for lumber falls in a virus lockdown through Q3?
taubs profile picture
maybe the toilet paper and amazon boxes will support the pulp prices lol
DayTradeLongTerm profile picture
I worry that less people in my age range ( 30's) will buy houses, due to student debt. Less desire for houses, less need for wood. That being said, I think the need for wood will always exist and CCT seems under priced with a solid yield.
Andrew thank you for sharing.

CTT is going to struggle. The current team has to clean up Jerry's exuberant acquisition strategy.
Oregon: No money being made there. They even made a play for Phaunos (What was he thinking).

They also need to provide more clarity on per share values. At the end of each year they should provide the liquidation value per share. It would make it easier to determine if real value is being created.
Mr G profile picture
I have bot it twice and made a killing in it plus the dividends. It's called buy low I.e. now, and sell high i.e. after cv 19 subsides, a year or so from now! Excellent article!
jasonmonroe profile picture
I’ve bought this twice and broke even minus the dividends. Not reliable.
Scooter-Pop profile picture
Great Buy in CTT if Trump makes a second hitch.
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