Plum Creek Timber Co. Inc. (PCL), Weyerhaeuser Company (WY), Rayonier Inc. (RYN): How to Build Up Your Portfolio

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With the purchase, Weyerhaeuser noted it is now considering the spin-off of its home-building and real estate development business to focus more on developing wood products.

Hedgie trade

Going into the second quarter, there were a total of 13 hedge funds long Rayonier Inc. (NYSE:RYN), an 8% increase from the previous quarter. The top hedge fund owner had a $227 million position and it was Jean-Marie Eveillard’s First Eagle Investment Management (check out First Eagle’s high yielders).

First Eagle also has an affinity for both Weyerhaeuser Company (NYSE:WY) and Plum Creek Timber Co. Inc. (NYSE:PCL), having the top position among hedge funds in both. For Plum Creek, there were a total of 12 hedge funds long the stock. Behind First Eagle’s top position was Markel Gayner Asset Management in second with an $18.3 million position (check out Markel’s newest stock picks).

For Weyerhaeuser Company (NYSE:WY), there were a total of 33 hedge funds long the stock, with Third Avenue Management having the second-largest position worth $194 million and accounting for 3.7% of its 13F portfolio (see Third Avenue’s top picks).

Bottom line

I’ve had an appreciation for timber REITs over the past few months, with my top pick being Rayonier given the company’s high margins; however, with the recent pullback in Plum Creek, it’s time to reconsider.

Rayonier Inc. (NYSE:RYN)’s exposure to the high-margin, high-barriers-to-entry fibers business is impressive, but I like Plum Creek Timber Co. Inc. (NYSE:PCL) due to its exposure to the housing industry via its greater reliance on timber and real estate, even compared to Weyerhaeuser. And Plum Creek offers investors an impressive 18% return on equity, compared to Weyerhaeuser Company (NYSE:WY)’s 11.5%.

The article How to Build Up Your Portfolio originally appeared on and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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