I like WY for several reasons. First, its stability; owning WY reduces the risk profile of my portfolios, which are overweight small biotech companies.
What makes WY’s business stable? Although the housing market is cyclical, the unit volume of WY’s timberlands grows at a high-single-digit percentage every year, no matter what else happens. If the market price for a particular kind of wood in a particular region of the country is unattractive at any given time, WY can simply let those trees grow, realizing greater value (on a time-discounted basis) by deferring harvesting until pricing improves.
Timberlands are an excellent inflation hedge. No other publicly traded company possesses anything close to WY’s large and diversified (in terms of species and geography) timberland assets.
The downstream part of WY’s business (OSB and specialty wood products) is not something I would invest in on a pure-play basis, but it comes with the package. (I got into WY by owning PCL, which was an almost pure timberlands play.)
I like that WY’s quarterly dividends are treated as LT-capital-gains distributions (due to a quirk in the US tax code for timber cutting). Hence, unlike ordinary dividends, WY’s distributions can be offset by capital losses from other investments.
Finally, WY participates materially in wood exports to Asia and thus is a beneficiary of ‘The Global Demographic Tailwind’ that is the investing premise of this message board.
“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”
