In this article, we discuss 12 best land and timber stocks to buy.

Horizon Kinetics is an investment adviser managed by Murray Stahl that focuses on discovering investment prospects that are often overlooked or undervalued by the broader market. Their approach is research-oriented and involves conducting extensive analysis to identify enduring trends and potential investment themes. The firm places particular emphasis on the significance of owning tangible assets like timberland, farmland, and intellectual property, which they believe can generate consistent returns over an extended period. In this article, we delve into Horizon Kinetics’ 1st Quarter Commentary, which provides insights into various topics such as the banking crisis, diverse asset classes, different business models including land, a comparison between gold and cryptocurrencies, and the potential regulatory challenges faced by cryptocurrencies.

The Silicon Valley Bank Crisis

The Federal Reserve is currently facing circumstances that extend far beyond the scope of the Taylor rule. In economics, the Taylor rule proposes that the Federal Reserve should increase interest rates when there is high inflation or when employment reaches its peak level. Conversely, interest rates should be lowered when employment levels and inflation rates are low. Horizon Kinetics noted that one of these circumstances is the recent banking crisis, which commenced with the collapse of Silicon Valley Bank (SVB) on March 10. SVB, with assets comparable to Morgan Stanley and one-third larger than American Express, was the 16th largest bank in the United States. The Federal Deposit Insurance Corporation (FDIC) was compelled to intervene and order the closure of SVB when the bank depleted its cash reserves and became unable to meet withdrawal demands from depositors. Interestingly, unlike previous instances, the bank’s downfall was not attributed to credit losses. Just three weeks prior, the Forbes 2023 edition of America’s Best Banks had ranked SVB as the 20th best bank in terms of operating efficiency and profitability ratios, indicating effective management. It is crucial to recognize that this issue is not specific to SVB but represents a systemic problem affecting the entire banking industry, with SVB serving as a convenient example. 

An additional issue affecting the entire system, triggered by the Federal Reserve’s decision to increase short-term interest rates, is the emergence of immediate and interchangeable competition for depositors of banks. These depositors had previously endured periods of minimal or zero interest rates offered by banks. Hence, even prior to the collapse of SVB, there had been a significant outflow of deposits from the banking system. It is important to note that attempting to extrapolate a few weeks or months of data, as shown in the accompanying table, to an annualized basis is a significant distortion. Nonetheless, deposit outflows from banks had been persisting for at least a year and intensified in the weeks leading up to these events.

Banks and Real Estate

Banks currently hold trillions of dollars in commercial real estate loans. Horizon Kinetics data suggests that as of the end of 2019, before the Covid-19 pandemic, one category of these loans had a U.S. office vacancy rate of 11.4%. However, by September 2022, this rate had increased to 15.4%. Despite this increase, it has not posed significant issues thus far, as delinquency and charge-off rates for commercial real estate loans have remained low during this period. Nonetheless, during a crisis, these rates can escalate significantly. At the end of last year, the delinquency and charge-off rates for commercial real estate loans were 0.68% and 0.04%, respectively. In the first quarter of 2010, these rates were much higher, at 8.92% and 2.1%, respectively. If the currently low delinquency rate were to reverse for any reason, it would result in severe financial difficulties.

What Comprises a Land Company? 

Land is a business asset with the longest lifespan, and it may be the only asset that can last almost indefinitely. The value of land also increases due to its growing scarcity as the global population continues to rise. Arable land per person is consistently decreasing worldwide. Moreover, land has the ability to transition into progressively higher-value uses over time. For instance, grazing pasture can be transformed into farmland, which can later be integrated into an expanding urban area. On the outskirts of a city, a warehouse can be converted into an office park, while within the city, a low-rise building’s plot can be repurposed into a towering office structure. Investing in land involves embracing the fact that while it can yield substantial returns in the long run, the process of value appreciation can be extremely protracted. It is not uncommon for individuals to wait their entire lives to see a significant return on their real estate investments. Many become disenchanted with the investment before the slow process of compounding can yield results. Nevertheless, land has the potential to be an exceptional vehicle for long-term returns and as a hedge against inflation.

One may argue that the real estate investment trust (REIT) industry and home builders serve as comparable alternatives to investing in land. However, Horizon Kinetics pointed out that there are key distinctions to consider. REITs own various properties such as office buildings, homes, storage facilities, or malls, and their income primarily stems from the activities and operations associated with these properties, rather than from the land itself. It is important to note that REITs are required to distribute a significant portion of their income as dividends, limiting the potential for internal compounding through reinvestment or share repurchases. Additionally, they rely on external funding, often through debt and share issuances, to finance expansion, which can make them sensitive to credit and interest rate fluctuations and dilute shareholder returns.

Regarding home builders, while they may acquire land for their projects, this land is typically held as inventory and used for relatively near-term purposes. The land is converted into operational assets and is not retained solely for its land value. Acquiring land for homebuilding can be costly and challenging, particularly during economic upswings. Furthermore, the homebuilding industry often involves debt leverage, which contributes to its short-term cyclical nature.

An Iconic Land Company 

There is a land company that has been publicly traded for over a century, making it the fourth-longest listed company on the New York Stock Exchange. What sets this land company apart is its stability, as it has not undergone any significant recapitalizations, acquisitions, or ownership changes that would complicate return calculations. The results are truly remarkable. The initial stock price was $20 per share, and nearly 40 years later in 1927, it reached $2,000, becoming the highest-priced company on the Exchange at that point. Today, the share price is 286,857 times higher than the initial $20, which would equate to a staggering $5.7 million per share if there were no stock splits. This exceptional land company is known as Texas Pacific Land Corporation (NYSE:TPL). While it is commonly categorized as an energy sector company, it was originally classified under “Real Estate Trust & Land Stocks” in financial newspapers’ quotation sections, per the Horizon Kinetics report. 

Challenges Associated with the REIT Framework

The Horizon Kinetics report also discussed that the REIT structure often appears to function as a means to raise significant amounts of external capital from equity investors and lenders, which is then converted into dividend payments. Unfortunately, a considerable portion of the potential growth is often transferred to investors in the form of equity offering fees and interest expenses. While growth can be achieved during periods of high equity valuations through the issuance of new shares to fund beneficial acquisitions, this growth is dependent on capital market pricing rather than inherent in the business model. Additionally, the debt incurred in this process introduces significant cyclical risk.

Timberland REITs, on the other hand, can take advantage of the inflationary benefits associated with land ownership. There are a couple of reasons for this. Firstly, similar to corporate land companies and homebuilders, timberland REITs already possess extensive land holdings, eliminating the need for additional land purchases. Secondly, while they are required to distribute a majority of their income, they have an inherent source of internal growth: the annual growth of timber. This growth comes at virtually no input cost as it is primarily driven by solar power. In fact, trees are perhaps the only large-scale commercial application of solar power that does not require energy-conversion capital equipment like solar panels.

With this outlook in mind, we discuss some of the best land and timber stocks to buy. These include Texas Pacific Land Corporation (NYSE:TPL), The Howard Hughes Corporation (NYSE:HHC), and Weyerhaeuser Company (NYSE:WY). 

Our Methodology 

We listed down the best land and timber stocks from Horizon Kinetics’ 1st Quarter Commentary, where the firm highlighted the top companies operating in the sector. The following performance and acreage figures are taken directly from the Horizon report. We also selected some of the land and timber companies below based on hedge fund sentiment towards each stock as of Q1 2023. The REITs included in this list own substantial land which consistently gains value over time, in addition to generating income from rental leases. This is why they are classified as land stocks, as explained in the Horizon report. 

Best Land and Timber Stocks To Buy

12. PrairieSky Royalty Ltd. (OTC:PREKF)

Number of Hedge Fund Holders: N/A

PrairieSky Royalty Ltd. (OTC:PREKF) holds the title of being Canada’s largest non-government landholder, owning a vast expanse of 9.7 million acres in western Canada. To put it into perspective, this land is roughly equivalent to the combined size of New Jersey and Massachusetts. If PrairieSky Royalty Ltd. (OTC:PREKF)’s royalty interests in government-owned land are included, the total land ownership extends to an impressive 18.3 million acres. PrairieSky Royalty Ltd. (OTC:PREKF) follows a business model that prioritizes an anti-dilutive capital allocation strategy over the long term. This approach is a management decision. PrairieSky’s shares offer a dividend yield of 4.6%, which could potentially be higher. However, the company maintains a low payout ratio in order to have enough cash flow for both investing in additional properties and conducting share repurchases.

Following PrairieSky Royalty’s bi-annual investor day, TD Securities downgraded PrairieSky Royalty Ltd. (OTC:PREKF) stock from Buy to Hold on May 18. The downgrade comes with a price target of C$24. TD Securities recognizes the advantages of the royalty model compared to other business types but attributed the downgrade to the stock’s strong performance so far this year and its current valuation.

In addition to Texas Pacific Land Corporation (NYSE:TPL), The Howard Hughes Corporation (NYSE:HHC), and Weyerhaeuser Company (NYSE:WY), PrairieSky Royalty Ltd. (OTC:PREKF) is one of the best land and timber stocks to watch. 

11. Acadian Timber Corp. (OTC:ACAZF)

Number of Hedge Fund Holders: N/A

Acadian Timber Corp. (OTC:ACAZF) provides primary forest products in Eastern Canada and the Northeastern United States. The company is divided into two segments, namely NB Timberlands and Maine Timberlands. Acadian Timber Corp. offers a variety of products including softwood and hardwood sawlogs, pulpwood, and biomass by-products. Acadian Timber Corp. (OTC:ACAZF), which focuses on generating income, possesses approximately 1.1 million acres of timberland in Maine and New Brunswick. Additionally, the company manages an additional 1.3 million acres of Canadian Crown Lands. With a minimal salary expense, Acadian Timber likely employs a small workforce of around a dozen employees or so. The company stands out as an exception to the growth constraints typically associated with real estate investment trusts. It is one of the premier land and timber stocks to invest in.

On May 4, Acadian Timber Corp. (OTC:ACAZF) reported Q1 GAAP earnings per share of C$0.22 and a revenue of C$22.36 million, topping Wall Street consensus by C$2.55 million. 

CIBC analyst Hamir Patel on January 10 maintained a Neutral rating on Acadian Timber Corp. (OTC:ACAZF) and lowered the firm’s price target on the shares to C$16 from C$17. 

10. Gladstone Land Corporation (NASDAQ:LAND)

Number of Hedge Fund Holders: 9

Gladstone Land Corporation (NASDAQ:LAND) is a real estate investment trust (REIT) that specializes in acquiring and owning farmland and farm-related properties situated in key agricultural markets across the United States. Gladstone Land Corporation (NASDAQ:LAND) leases these properties to third-party farmers. In addition to general farmland, the company also owns farms that cultivate permanent crops like almonds, apples, cherries, figs, lemons, olives, blueberries, and pistachios.

Gladstone Land Corporation (NASDAQ:LAND) has a vast ownership of over 115,000 acres of farmland, spread across 169 farms in 15 states. However, it faces certain growth limitations as a real estate investment trust. On the positive side, leasing farmland comes with the advantage of no operational expenses for Gladstone. The responsibility for capital expenditures, such as farm equipment, lies with the farmers who lease the land. As the property owner, Gladstone Land Corporation (NASDAQ:LAND) primarily provides the land and collects rent. In the event of rising prices of agricultural products, particularly during an inflationary cycle, the farmland’s value is expected to increase inherently. It is one of the best land and timber stocks to buy. 

According to Insider Monkey’s first quarter database, 9 hedge funds were long Gladstone Land Corporation (NASDAQ:LAND), compared to 7 funds in the preceding quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest stakeholder of the company, with 265,900 shares worth $4.4 million. 

9. Tejon Ranch Co. (NYSE:TRC)

Number of Hedge Fund Holders: 10

Tejon Ranch Co. (NYSE:TRC) is involved in real estate development and agribusiness. The company, along with its subsidiaries, operates through five distinct segments – Commercial/Industrial Real Estate Development, Resort/Residential Real Estate Development, Mineral Resources, Farming, and Ranch Operations. It is one of the top land and timber stocks to buy. 

The value of the land owned by Tejon Ranch Co. (NYSE:TRC) is primarily derived from its strategic location. Los Angeles serves as the largest port city in the United States and is a significant hub for e-commerce shipments. However, the city’s high rents, property prices, congestion, and regulations pose challenges for the expansion and development of warehouse and logistics facilities. Tejon Ranch Co. (NYSE:TRC) has capitalized on this situation by successfully developing over 8 million square feet of commercial, industrial, and retail space, including distribution centers, in close proximity to Los Angeles. Notable tenants leasing from Tejon Ranch Co. (NYSE:TRC) include companies such as Ikea, Dollar General, and Caterpillar. Interestingly, Tejon Ranch Co. (NYSE:TRC) itself occupies a land area that is approximately the same size as Los Angeles.

According to Insider Monkey’s first quarter database, 10 hedge funds were bullish on Tejon Ranch Co. (NYSE:TRC), compared to 9 funds in the preceding quarter. Murray Stahl’s Horizon Asset Management is the largest stakeholder of the company, with 1.15 million shares worth $21 million. 

8. Rayonier Inc. (NYSE:RYN)

Number of Hedge Fund Holders: 14

Rayonier Inc. (NYSE:RYN) is a prominent real estate investment trust focused on timberland, possessing valuable assets situated in highly productive areas for softwood timber growth within the United States and New Zealand. The trust generates revenue through fees charged to logging operators. It possesses a vast land portfolio spanning 2.8 million acres across 11 states in the US and New Zealand. It is one of the best land and timber stocks to watch. 

On May 19, Rayonier Inc. (NYSE:RYN) declared a quarterly dividend of $0.285 per share, in line with previous. The dividend is payable on June 30, to shareholders of record on June 16. 

Michael Roxland, an analyst at Truist, initiated coverage on Rayonier Inc. (NYSE:RYN) on May 15 by assigning it a Hold rating and a price target of $33. Rayonier Inc. (NYSE:RYN) stands out among the three publicly traded timber real estate investment trusts (REITs) because it exclusively focuses on timber and does not have any supplementary businesses like wood products. The analyst informed investors that the Hold rating is influenced by factors such as decreased demand for wood and timber, rising interest rates, concerns about profitability in the Pacific Northwest, and apprehension about an oversupply of sawtimber in the southern region of the United States.

According to Insider Monkey’s first quarter database, 14 hedge funds were long Rayonier Inc. (NYSE:RYN), compared to 16 funds in the earlier quarter. Ian Simm’s Impax Asset Management is the biggest stakeholder of the company. 

Here is what Third Avenue Management has to say about Rayonier Inc. (NYSE:RYN) in their Q3 2020 investor letter:

“Third Avenue has long championed enterprises with sound business practices run by aligned control groups that exhibit strong stewardship. Within Third Avenue’s real estate strategy, this oftentimes leads the Fund to “pass” on investments in companies with uncertain environmental liabilities, business models that could be deemed predatory, and corporate governance structures that are stacked against key stakeholders. Consequently, the select-set of real estate and real estate-related business that make it into the Third Avenue Real Estate Value Fund represent some of the true industry leaders in respect to their ESG practices, including Rayonier, that own more than ‘2.7 million’ acres of timberlands and sequester more carbon than any other privately-held enterprises globally (to our knowledge) — an underappreciated attribute that may ultimately have incremental value through a carbon-credit initiative or even strategic value for larger enterprises seeking to offset emissions.”

7. PotlatchDeltic Corporation (NASDAQ:PCH)

Number of Hedge Fund Holders: 16

PotlatchDeltic Corporation (NASDAQ:PCH) possesses a land portfolio of 2.2 million acres distributed across Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi, and South Carolina. As a manufacturer of wood products, the company employs 1,300 individuals. In addition to its primary operations, PotlatchDeltic Corporation (NASDAQ:PCH) operates several facilities through its taxable real estate investment trust (REIT) subsidiary, including six sawmills, an industrial-grade plywood mill, a business focused on residential and commercial real estate development, and a program for the sale of rural timberland. The company also has a leadership role in sustainable forest management. 

On May 5, PotlatchDeltic Corporation (NASDAQ:PCH) declared a quarterly dividend of $0.45 per share, which is payable on June 30 to shareholders of record on June 2.

Kurt Yinger, an analyst at DA Davidson, maintained a Buy rating and a price target of $55 on PotlatchDeltic Corporation (NASDAQ:PCH) shares on April 25, following the company’s better-than-expected Q1 earnings. According to the analyst’s research note, the company achieved these results by capitalizing on favorable logging conditions and achieving record harvest levels. Although the profitability of the Wood Products segment faced challenges, the firm suggests that it will still remain competitive, and possibly even favorable, compared to industry peers who are yet to release their earnings reports.

According to Insider Monkey’s first quarter database, 16 hedge funds were bullish on PotlatchDeltic Corporation (NASDAQ:PCH), with collective stakes worth $217.4 million. Jeff Ubben’s Inclusive Capital is the largest position holder in the company, with 3.14 million shares worth $155.7 million. 

ClearBridge Small Cap Strategy made the following comment about PotlatchDeltic Corporation (NASDAQ:PCH) in its Q4 2022 investor letter:

“We also seized the opportunity to add PotlatchDeltic Corporation (NASDAQ:PCH), in the real estate sector. The company owns 1.8 million acres of timberland in the U.S. as well as six sawmills, an industrial-grade plywood mill and a rural timberland sales program. The stock has been weak since lumber prices peaked in 2022, creating an exceptionally compelling entry point far below the value of its net assets. We believe the company will be able to successfully navigate through a potential downturn in construction without meaningful impairment of its assets based on its strong balance sheet. Additionally, as PotlatchDeltic’s inventory of trees will increase in value over time, the company will benefit from delaying its harvesting activity until the market rebounds to a more attractive level.”

6. West Fraser Timber Co. Ltd. (NYSE:WFG)

Number of Hedge Fund Holders: 16

West Fraser Timber Co. Ltd. (NYSE:WFG) is a diverse wood products company involved in the manufacturing, selling, marketing, and distribution of wood-based products. These include lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy sources. It is one of the best land and timber stocks to buy. West Fraser Timber Co. Ltd. (NYSE:WFG)’s Q1 2023 revenue of $1.63 billion outperformed Wall Street estimates by $200 million. 

On April 20, CIBC analyst Hamir Patel maintained an Outperform rating on West Fraser Timber Co. Ltd. (NYSE:WFG) but lowered the firm’s price target on the shares to C$126 from C$129. 

According to Insider Monkey’s first quarter database, 16 hedge funds were bullish on West Fraser Timber Co. Ltd. (NYSE:WFG), compared to 15 funds in the last quarter. Murray Stahl’s Horizon Asset Management is the largest stakeholder of the company, with 454,723 shares worth $32.4 million. 

Like Texas Pacific Land Corporation (NYSE:TPL), The Howard Hughes Corporation (NYSE:HHC), and Weyerhaeuser Company (NYSE:WY), West Fraser Timber Co. Ltd. (NYSE:WFG) is one of the best land and timber stocks to invest in.

5. Texas Pacific Land Corporation (NYSE:TPL)

Number of Hedge Fund Holders: 17

Texas Pacific Land Corporation (NYSE:TPL) is involved in land and resource management, as well as water services and operations. While it may be tempting to classify Texas Pacific Land Corporation (NYSE:TPL) as an oil sector company, it is undeniably a land-focused enterprise. Approximately 6% of TPL’s annual returns stem from the increase in the overall value of the land and the effective land-sale/share-repurchase initiative, which helps prevent dilution. Funding for share repurchases is partially generated through revenue from leasing activities, oil and gas royalties, as well as sales of water and minerals. It is one of the best land stocks to invest in. 

On May 22, Stifel maintained a Hold rating on Texas Pacific Land Corporation (NYSE:TPL) and lowered the firm’s price target on the shares to $1,378 from $1,399. This adjustment was made after revising estimates for TPL’s reported annual results and taking into account updated guidance provided by different companies covered under Stifel’s Americas mineral interest MLPs coverage.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Texas Pacific Land Corporation (NYSE:TPL), compared to 20 funds in the earlier quarter. Murray Stahl’s Horizon Asset Management is the largest stakeholder of the company, with 1.4 million shares worth $2.4 billion. 

Wedgewood Partners made the following comment about Texas Pacific Land Corporation (NYSE:TPL) in its Q1 2023 investor letter:

“Texas Pacific Land Corporation (NYSE:TPL) was a top detractor to performance during the quarter. Also, early in the quarter we trimmed our weighting after the stock’s remarkable run in 2022. The Company’s royalty interests span over 880,000 acres in West Texas. Most of this land is located in the highly productive Delaware Basin of the Permian Basin. Although oil and gas prices will always be volatile over the short term, we expect development activity on the Company’s acreage to continue to grow at a rapid pace, primarily driven by both domestic and multinational producers looking to maximize returns on increasingly scarce oil and gas capital expenditures.”

4. Simpson Manufacturing Co., Inc. (NYSE:SSD)

Number of Hedge Fund Holders: 17

Simpson Manufacturing Co., Inc. (NYSE:SSD) specializes in the design, engineering, manufacturing, and sale of wood and concrete construction products. Their product offerings include a range of wood construction products such as connectors, truss plates, fastening systems, shear walls, and pre-fabricated lateral systems for use in light-frame construction. Additionally, it offers various connectors and supplementary items for wooden framing, timber and offsite construction, structural steel construction, and applications involving cold-formed steel. It is one of the best land and timber stocks to monitor. 

On April 27, Simpson Manufacturing Co., Inc. (NYSE:SSD) declared a $0.27 per share quarterly dividend, a 3.8% increase from its prior dividend of $0.26. The dividend is payable on July 27, to shareholders of record on July 6. 

Baird analyst Timothy Wojs increased Simpson Manufacturing Co., Inc. (NYSE:SSD)’s price target to $140, up from $125, while maintaining an Outperform rating on the shares. The analyst noted that Simpson Manufacturing Co., Inc. (NYSE:SSD) had a strong quarter and raised their full-year EBIT guidance, which could potentially exceed expectations and result in a significant boost to our estimates.

According to Insider Monkey’s first quarter database, 17 hedge funds were bullish on Simpson Manufacturing Co., Inc. (NYSE:SSD), compared to 20 funds in the earlier quarter. John W. Rogers’ Ariel Investments is the largest stakeholder of the company, with 629,419 shares worth $69 million. 

Heartland Opportunistic Value Equity Strategy made the following comment about Simpson Manufacturing Co., Inc. (NYSE:SSD) in its Q4 2022 investor letter:

“These are companies like Simpson Manufacturing Co., Inc. (NYSE:SSD), which designs and manufactures connectors and fasteners used in new construction.  Simpson dominates the domestic wood connector market, controlling roughly 75% share thanks to the company’s high value add. If a structural connector fails, the building is uninhabitable, yet Simpson products typically account for <0.5% of a building’s construction cost. As a result, the company enjoys pricing power and a long-term median operating margin (earnings before interest and taxes, or EBIT, divided by sales) of 17%, versus 12% for its Building Product industry peers. But the stock was down around 45% through late October, as investors grew concerned about a housing recession. Simpson’s earnings will be down significantly in 2023; however, we believe the stock is undervalued relative to normalized earnings. Longer term, the rise in building code requirements should result in more demand for SSD connectors per unit of construction.

When we purchased SSD, the stock was trading at a price/earnings ratio of around 12 based on forecasted earnings over the next 12 months. That was well below Simpson’s long-term median valuation of 21 times earnings. Today, the shares are trading at 16 times earnings for the next 12 months, after analysts cut their fiscal 2023 forecast by around 20% since the end of the third quarter.”

3. The Howard Hughes Corporation (NYSE:HHC)

Number of Hedge Fund Holders: 24

The Howard Hughes Corporation (NYSE:HHC) is involved in the ownership, management, and development of various commercial, residential, and mixed-use properties across the United States. The company operates through four distinct segments – Operating Assets, Master Planned Communities (MPCs), Seaport, and Strategic Developments. Howard Hughes possesses large tracts of land that can be developed over extended periods, spanning decades or even generations. The firm owns land with long-term development potential, making it one of the best land stocks to invest in. 

On October 7, 2022, Piper Sandler analyst Alexander Goldfarb maintained an Overweight rating on The Howard Hughes Corporation (NYSE:HHC) but lowered the firm’s price target on the shares to $81 from $100. 

According to Insider Monkey’s first quarter database, 24 hedge funds were bullish on The Howard Hughes Corporation (NYSE:HHC), compared to 18 funds in the prior quarter. Bill Ackman’s Pershing Square is the biggest stakeholder of the company. 

Bernzott Capital Advisors made the following comment about The Howard Hughes Corporation (NYSE:HHC) in its Q4 2022 investor letter:

“The Howard Hughes Corporation (NYSE:HHC): The real estate developer’s master planned community results were better than expected amid fears of a housing slowdown, and stabilizing interest rates eased pressure on the stock from earlier in the year. Pershing Square, a significant shareholder, tendered to purchase more shares during the quarter, highlighting value.”

2. Louisiana-Pacific Corporation (NYSE:LPX)

Number of Hedge Fund Holders: 30

Louisiana-Pacific Corporation (NYSE:LPX) offers building solutions primarily for the new home construction, repair, remodeling, and outdoor structure markets. The company is involved in multiple aspects of timber production, including timber harvesting, processing, and distribution. Louisiana-Pacific Corporation (NYSE:LPX) sources timber from their own timberlands and other suppliers, ensuring a steady supply of quality wood products. It is one of the best land and timber stocks to invest in. 

On May 4, TD Securities upgraded Louisiana-Pacific Corporation (NYSE:LPX) to Buy from Hold with a price target of $75, up from $63. The firm believes that the margin pressure experienced in the Siding segment, as indicated in the Q1 report, will be temporary. They also consider the management’s Q2 guidance to be conservative. TD Securities expects that Q1 will mark the lowest point for earnings and anticipates that the Siding segment’s excess inventory in the distribution channels will gradually improve in the upcoming quarters. 

According to Insider Monkey’s first quarter database, 30 hedge funds were bullish on Louisiana-Pacific Corporation (NYSE:LPX), and Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 7 million shares worth $382 million. 

SouthernSun SMID Cap Strategy made the following comment about Louisiana-Pacific Corporation (NYSE:LPX) in its Q1 2023 investor letter:

“We initiated a position in Louisiana-Pacific Corporation (NYSE:LPX) during the quarter. LPX is a leading producer of oriented strand board (OSB) and siding, primarily in North America. In recent years, management has transformed the business from a focus on producing commodity OSB products into a “building solutions” company producing more value-add OSB products and engineered wood siding. The company is organized into two divisions – siding solutions and OSB.

LPX’s siding solutions segment produces a full line of engineered wood siding and related products. These products generally offer for homeowners superior aesthetics and performance properties and, for contractors, reduced labor cost and better ease of installation relative to competing alternatives. In addition, they have superior sustainability characteristics to most other siding substrates. As partial proof of its value proposition and growing market acceptance, LPX siding has grown 60% over the last two years, greatly outperforming U.S. single-family housing starts which grew just 1.4% over these two years…” (Please click here to read the full text)

1. Weyerhaeuser Company (NYSE:WY)

Number of Hedge Fund Holders: 30

Established in 1900, Weyerhaeuser Company (NYSE:WY) is a prominent entity in the timber industry and stands as one of the largest private owners of timberlands worldwide. With its vast holdings, the company possesses ownership or control over millions of acres of timberlands in the United States, while also managing additional timberlands in Canada through long-term licensing agreements. It is one of the best land and timber stocks to invest in. 

On May 12, Weyerhaeuser Company (NYSE:WY) declared a quarterly dividend of $0.19 per share, in line with previous. The dividend is payable on June 16, to shareholders of record on June 2. 

DA Davidson analyst Kurt Yinger upgraded Weyerhaeuser Company (NYSE:WY) on April 10 to Buy from Neutral with a price target of $35, up from $34. The analyst believes that with commodity wood product prices stabilizing at lower levels, there is potential for an upward trajectory. The firm also highlighted that expectations for Weyerhaeuser Company (NYSE:WY) have been appropriately adjusted, and the recent decline in the stock price over the past two months presents an appealing opportunity for investors to enter the market.

According to Insider Monkey’s first quarter database, 30 hedge funds were bullish on Weyerhaeuser Company (NYSE:WY), compared to 29 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest position holder in the company. 

Here is what Third Avenue Management has to say about Weyerhaeuser Company (NYSE:WY) in its Q3 2020 investor letter:

“Third Avenue has long championed enterprises with sound business practices run by aligned control groups that exhibit strong stewardship. Within Third Avenue’s real estate strategy, this oftentimes leads the Fund to “pass” on investments in companies with uncertain environmental liabilities, business models that could be deemed predatory, and corporate governance structures that are stacked against key stakeholders. Consequently, the select-set of real estate and real estate-related business that make it into the Third Avenue Real Estate Value Fund represent some of the true industry leaders in respect to their ESG practices, including Weyerhaeuser, that own more than 16 million acres of timberlands and sequester more carbon than any other privately-held enterprises globally (to our knowledge)— an underappreciated attribute that may ultimately have incremental value through a carbon-credit initiative or even strategic value for larger enterprises seeking to offset emissions.”

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Disclosure: None. 12 Best Land and Timber Stocks To Buy is originally published on Insider Monkey.