Seeking Alpha: Plum Creek Timber Biding Time

The wait for Plum Creek Timber's (PCL) realization of value from its timber assets drags on. These shares bounced up for a little while after my Top Idea write-up in September 2013 ("Patient Investors Get A Crack At Plum Creek Timber"), but declined sharply on the announcement of the acquisition of MeadWestvaco's (MWV) timberland and the concomitant equity offering. Matters were helped little when the company followed that up in January of 2014 with a weak guide for 2014 EPS on lower land sales.

Plum Creek shares have long traded at premiums to Weyerhaeuser (WY) and Rayonier (RYN) (at least on an EBITDA basis), but investors seem to be tiring of the wait for a sustained recovery in housing construction and demand for sawlogs in the southern U.S. For what small consolation it offers, it doesn't appear that Plum Creek's issues are all company-centric, as Rayonier and Potlatch (PCH) have declined by similar amounts since September and Weyerhaeuser is also in the red for that period.

I remain bullish on the long-term value of these shares, but I realize that a "be patient, it gets better" call is not the most compelling call to make, particularly with the shares trading around 19x 2014 EBITDA. A clean 2014, with higher harvest volumes and better prices, would be welcome, but patient investors can still find a lot of value in the company's substantial timberland holdings, real estate development potential, and possible biomass energy play.

The complete article is here at Seeking Alpha:
Plum Creek Timber Biding Time