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Wood and One-Armed Bandits



December 19, 2012 – Comments (3) | RELATED TICKERS: LVS , RYN

Ok, I've got two more interesting investment ideas that I came across this afternoon courtesy of Market Folly's "What We're Reading".  The first came to me after reading a really interesting bullish article on lumber prices.  It got me thinking that now might be a good time to pick up shares of some of the timber REITs that are out there.

 One that I personally like is Rayonier (RYN). It's a timber REIT that currently yields 3.5% with a potential additional catalyst:

 Alex Klabin made a compelling case for investing in Rayonier at the November Invest For Kids Chicago conference. He believes that the company is currently 30% to 60% undervalued and that it could begin to unlock that value thorugh a potential spin-off of its fiber business in 2013 or 2014.

‘Super cycle’ for forest products expected to send lumber prices up in 2013

The second idea comes from a bullish write-up on Las Vegas Sands (LVS).  The author of this piece believes that shares of LVS are seriously undervalued, not because of its casino operations, but because of its valuable real estate. 

The author contends that if LVS were to split up into a mall REIT, a lodging REIT and a casino operator (somewhat similar to what Penn National Gaming is proposing) that its stock, whcih sits at $43 today, would be worth $85.

He goes even further saying that in 5 years, mainly as a result of growth in Asia, the stock could be worth $170.
Now I don't know about the latter part, but the undervalued realestate and potential conversion into a REIT are certainly intriguing.

Double Your Money on the Real Estate of Sheldon Adelson's Empire 


3 Comments – Post Your Own

#1) On December 20, 2012 at 4:03 AM, ikkyu2 (98.55) wrote:

Jeremy Grantham, in a video I watched a couple years ago, said that wood was his no-brainer investment for the next 30 years.  The pitch was compelling.  Definitely would want to be cautious about fiber as a subset of wood, because bamboo, a far cheaper and more renewable resource, is beginning to compete - you can buy Melitta brand bamboo coffee filters, did you know that?

Litt makes some good points about LVS valuation, although some of his EBITDA numbers I think he sort of plucks out of thin air.  The stock *is* undervalued, but he is wrong to think that the market is going to quit treating it like a cyclical, and wrong to think that Shecky would ever break up his empire, which enjoys terrific synergies (basically the same rich people love the lodgings, the casinos and the malls, and it would be silly to give them 3 different customer service experiences.)

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#2) On December 20, 2012 at 4:04 AM, ikkyu2 (98.55) wrote:

Sorry, full disc:  No position in any wood or fiber companies, though PCL is on my real life watchlist; long MGM, for similar reasons as cited for LVS.

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#3) On December 20, 2012 at 11:29 AM, miteycasey (28.97) wrote:

But is casino land a Bubble? It has a very small group of buyers at current prices if you don't have a casino sitting on it.

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