The Rising Influence of Rising Affluence

[DewDiligence]

PCL expects US housing starts of 1.1M in 2015, which is +10% YoY, but less than the Wall Street consensus (see chart in #msg-101175278). As a result, PCL probably won’t be raising its dividend during the next few quarters, and the stock may sell off tomorrow.

On a positive note, if the share price remains lower than what PCL believes is warranted by the private-market value of its timberlands, PCL will engage in arbitrage by selling selected timberlands and using the proceeds to repurchase its own shares.

During 3Q14, PCL repurchased $50M of stock; today, it announced the sale of $165M of conservation land in Montana and Washington State (http://finance.yahoo.com/news/nature-conservancy-acquire-165-000-200300006.html ) at an average price of $2,400 per acre.

PCL’s 3Q14 PR:
http://finance.yahoo.com/news/plum-creek-reports-results-third-200500686.html