Most of the readers of this newsletter follow both pulp and paper as well as lumber. In North America, the lumber market has been in a tailspin.
Many years ago, lumber, pulp, paper and even some converting operations were all often owned within the same entity. Over my lifetime, these various businesses, requiring different types of expertise, were decoupled and rejoined to others set free in the same manner.
Some of this was due to possibilities to take certain tax advantages. Others were to capitalize on marketing expertise. Either way, they made sense at the time and continue to do so.
The recent collapse of lumber prices affirms this was the right thing to do--separate the businesses so values in one sector do not affect values in another.
When I was young, the forest products companies were organized by technology. As technology got better and marketing became key, it was time to reorganize. Some opportunistic tax policies drove this idea further.
Now, one has an opportunity to make almost "pure play" investments in the forest product sector based on products produced. This mimics the demise of conglomerates.
Now, one has an opportunity to make almost "pure play" investments in the forest product sector based on products produced. This mimics the demise of conglomerates.
There is one place, however, where you can still judge the forest products industry as a whole. That is our own
PM40 Index. If you are not familiar with it, you might want to check it out. We provide some interesting
tools to assess the industry as a whole. We even track
insider trading.
