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Tuesday, December 28, 2010

Weyerhaeser Company (WY)

Yep, the tree harvesting company.  They manage about 6.6 million acres of private commercial forest and have long-term licenses on 15.2 million acres of forest.

Company slideshow
They're adopting a RIET structure for 2010 with what looks like all the "other" stuff in the trust.
Expect to pay 60 cents in dividends in 2011, target of 75% of Funds Available for Distribution, but it may turn out to be 100%, given the outlook of things now.

Stock price is $18.71.

Latest 10-K

Obviously, things were a lot better during the housing boom.  The big question for this stock is what does the long-term wood products demand look like?  There are all sorts of other issues, but I think it really boils down to macro-economics.  We're not going to close down civilization.  We're not going to find a fabulous cheap substitute for the massive amount of lumber needed (if you consider the amounts involved and where the material would need to come from... mining).

The company had big losses in 2007, 2008, and 2009.  For the first three quarters of 2010, they've been making some money (mostly in Q3), but it's less than it appears due to a tax benefit.

Back of the envelope calculations show that the stock is selling for a reasonable price based on what's going on right now.  That would seem pessimistic, but I'm only skimming the surface right now.

This stock is worth a closer look, but seeing how everyone is looking for a good commodity investment, it seems unlikely to be cheap.

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