Corsair Capital Management Owns 5.6% of Wausau Paper Corp. (WPP)

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Clearwater and Domtar carry trailing earnings multiples in the teens, so growth standards there are lower than at the other three companies. Revenue numbers at each company were actually down slightly in their most recent quarter compared to the same period in the previous year. In the case of Domtar, this was accompanied by a 69% decrease in net income over the same time frame; between that and the revenue numbers we think that International Paper and possibly Kapstone would be better prospects even given the higher earnings multiples at those companies. Clearwater recorded a high percentage increase in earnings, but over time we would expect bottom line growth to converge to that of the top line. Those figures lagging, and the advantage in terms of trailing P/E is narrow.

As a result we would say that these two companies seem too unstable at this time, while Wasau is too speculative. KapStone does look good in terms of its financials, but if we had to look at a paper company International Paper would be our first pick given its considerably larger size. The valuation does look high, however, so we would need to be convinced that analysts are on to something with their earnings projections.

Disclosure: I own no shares of any stocks mentioned in this article.

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