International Paper Company (IP), Rock-Tenn Company (RKT), KapStone Paper and Packaging Corp. (KS): Perry Capital is Betting on Paper Mills

Several stocks in the paper and packaging industry rocketed on Thursday, July 24, after a report from Richard Perry’s Perry Capital got out. In the document, the fund presented a bullish case for the paper and packaging producers that could pursue Master Limited Partnership (MLP) treatment. According to several sources that could take a look at this report, the fund had commissioned an analysis by PricewaterhouseCoopers (PwC), which “concluded that domestic virgin containerboard mills using less than 25% recycled fiber, based on annual input weight, should be MLP-eligible and that such assets could be contributed to an MLP on a tax-efficient basis.”

Richard Perry

But, why would getting MLP treatment be so favorable for these companies?

Well, MLPs pay no federal income tax, as long as they distribute most of their cash to shareholders. And, although none of these companies have yet requested a ruling from the IRS, some of them are already considering the option – as International Paper Company (NYSE:IPspokesman Tom Ryan confirmed.

Anticipating the adoption of this new tax structure, which could in turn result in a 50%-100% share price increase –according to the report, Mr. Perry has been betting on the paper and packaging industry, Bloomberg News reported. In a second-quarter letter to investors that Bloomberg could access, the fund “took positions or increased holdings in International Paper Company (NYSE:IP), Rock-Tenn Company (NYSE:RKT) and KapStone Paper and Packaging Corp. (NYSE:KS).

Other major hedge funds betting on all three of the aforementioned companies – International Paper Company (NYSE:IP), Rock-Tenn Company (NYSE:RKT) and KapStone Paper and Packaging Corp. (NYSE:KS) - are D E Shaw, which last reported having either increased or started a new position in these companies; and Steven Cohen’s former SAC Capital Advisors, currently known as Point72 Asset Management (and one of its subsidiaries: Cr Intrinsic Investors).

International Paper Company (NYSE:IP) advanced by 5.54% on Thursday’s trading, Rock-Tenn Company (NYSE:RKT) – by 7.49%, and KapStone Paper and Packaging Corp. (NYSE:KS) – by 10.44%. However, the companies still look attractive in terms of valuation, especially since stock prices could rocket even higher any time soon.

Disclosure: Javier Hasse holds no position in any stocks or funds mentioned

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!