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July 28, 2010 Dear Friend.
We invite you to join
us in Seattle August 12-13 to visit Plum Creek on the
12th after 2 pm and through dinner, and Weyerhaeuser in
Federal Way the following morning of the 13th time to
permit outbound flights after 1 pm. Plum Creek and
Weyerhauser are the two largest holders of US
forestlands with each owning almost 2% of the 356 mm
acres of private forests. Timberlands can be viewed as
a "store of value," often tracking the price of gold.
Separately, we want
to mention our August-September travel schedule. On
August 5-6 we will visit Vale's Carajas iron ore deposit
and potash mine in Brazil (visa and invitation
required), August 16-20th we will visit Newmont Mining
and at least four smaller cap Nevada gold mines through
Elko (flights in/out Elko tough to book), Sept-13-15 we
will visit Goldcorp's Red Lake, Musselwhite and
Porcupine gold mines in Ontario and on Sept. 20-22 we
will attend the Denver Gold Show. We do not plan to
visit Coeur d'Alene Mines Kensington gold mine outside
of Juneau, AK Sept 8-10 nor Great Basin Gold's Hollister
gold mine just north of Barrick Gold's Goldstrike mine
in NV on September 16th as we received more invitations
than we can accommodate.
Despite its
disappointing June quarter earnings, we upgraded
Temple-Inland to Neutral from Underweight as
containerboard prices have risen more than we expected
as costs fell. Further, the re-emergence of
Smurfit-Stone Container provides a basis for comparison
for Temple-Inland, Packaging Corp. of America and IP.
TIN looks a lot better to us after studying the
Smurfit-Stone reorganization.
We downgraded Plum
Creek to Neutral from Overweight as its shares rose
$1.83 over the past two months in falling markets as
both log demand and land demand evolved badly. Wood
prices collapsed after May 10th, falling 30% to 50% to
hurt log volumes as well. New home sales nationally in
May and June were the lowest in a half century of
record-keeping. Plum Creek's land holdings have fallen
from a peak of 8.2 mm acres to under 7 mm acres perhaps
to 6.7 mm acres by year-end 2010, and the tradeoffs of
declining acreage, share repurchases and dividend
maintenance are less exciting to us.
Faithfully,
John C. Tumazos, CFA
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Copyright © 2008 John Tumazos Very Independent Research,
LLC
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