I’ve known for 4-5 months that famed value investor Seth Klarman has been invested in two paper-related companies: International Paper (IP) and Domtar (UFS). It seems that lumber and paper-related companies have been particularly out of favor. However, International had a great day, gaining nearly 14% after announcing net earnings gains of 20%. In fact, Bloomberg reported, “International Paper Soars Most in 28 Years on Profit.”
Another interesting tidbit is that with IP’s recent acquisition of a business asset from Weyerhauser, IP will soon be the world’s largest maker of containerboard and corrugated boxes. Sounds like a decent-sized moat to me.
Turning away from paper and towards lumber, the market blog from the Canadian Globe and Mail asks whether lumber be the next oil? The Canadian blog gives particular attention to Canfor Corp., Canada’s largest (or second-largest by market value) lumber producer.
Canfor’s stock has fallen over 40% in the last 12 months, yet Canfor’s CEO Jimmy Pattison has been purchasing shares and has increased his stake in the company to nearly 30%. The fact that Pattison is aligning his interests with the company is a great sign. Pattison also seems to have a history as an activist investor. Two other catalysts for a recovery of Canfor’s stock is a falling Canadian dollar or a recovery of the U.S. housing market.
Things still look pretty bad for Canfor, and most likely other lumber companies as well. A recovery can be imagined, but is not in clear view. But aren’t the bad times the best times for a value investor?
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