Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.
+1 212 318 2000
Europe, Middle East, & Africa
+44 20 7330 7500
+65 6212 1000
Posted by: Aaron Pressman on September 14, 2006
Homebuilding stocks have been crushed this year on the slowdown in the housing market. Whether they’re going down much further is an open question, with some well-known value investors arguing that the segment is already pricing in substantial bad news. I’d tend to disagree and look for further declines given the bubble conditions that have prevailed in mortgage lending and real estate prices for the past several years. But there’s another way to play the housing slowdown and that’s in timber prices. A Morgan Stanley research report this week noted that just the slow down in housing starts, that is a decline in the number of new homes being built, is likely to hurt lumber prices and within a year or two, the value of timber lands as well.
And there’s a pretty direct play on timber in Plum Creek Timber (Symbol: PCL), a company that reorganized in 1999 as a real estate investment trust which owns some 8 million acres of timber lands all over the United States. Morgan Stanley expects falling timber could trim at least $5 off Plum Creek’s share price, currently around $34. That makes it a decent shorting candidate. Other stocks that could be hit a bit less include MeadWestvaco (MWV), Weyerhaeuser (WY) and Temple-Inland (TIN), though Morgan Stanley rates only Plum Creek and MeadWest “underweight.”
Businessweek’s Emily Thornton, Amy Feldman, Ben Levisohn, and Ben Steverman focus on matters great and small for investors, from the views of a hot fund manager to an explanation of the latest products devised by Wall Street’s rocket scientists. Exploring trends in any area, from bonds and stocks to closed-end funds and futures, always with an eye towards giving investors a better understanding of the sometimes confusing and often chaotic world of finance. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.