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Forest products stocks
December 8, 2019
1:42 pm
Bud
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Whats wrong with the industry?
Who will survive and thrive
Canfor
Western Fraser Timber
Norbord
Interfor
Domtar Cascades

December 8, 2019
7:25 pm
Loonie
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If I were an investing type, I would invest in forest fire fighting equipment. Seems to have a "bright" future.

December 8, 2019
7:45 pm
Brimleychen
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There was a company on TSx: Sino Forest (TSX: TRE). It went belly up a few years ago (2012?) because it was a scam. As result, most of big investment banks on Bay Street paid some fines, and investors got nothing.

Be careful.

December 9, 2019
6:59 pm
mmlt
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Pattison owns 100% of Canfor now. He must think the lumber industry will rebound.

December 9, 2019
7:41 pm
Bud
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Ahh ya hes takin over Canfor

December 17, 2019
6:55 am
Bud
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mmlt said
Pattison owns 100% of Canfor now. He must think the lumber industry will rebound.  

Canfor looks interesting now that minority shareholders rejected the deal it fell significantly. So if they think its worth more and Pattison significant stakeholder wanted to buy it and its trading near lows my take it could be a buy

December 17, 2019
9:09 am
Doug
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Bud said
Canfor looks interesting now that minority shareholders rejected the deal it fell significantly. So if they think its worth more and Pattison significant stakeholder wanted to buy it and its trading near lows my take it could be a buy  

45% of minority shareholders wanted the deal to go through; they will be mightily pissed off at the 5% that scuttled the deal. I'm not surprised Pattison pulled his bid; he doesn't take kindly to being rebuffed and isn't known for increasing his bid.

AltaRed may want to comment here, but I actually think this is a net negative on the stock. With the unresolved Canada-U.S. software lumber trade dispute and weakening economies in Canada and the U.S., lumber prices will remain depressed for at least the medium-term. I think Canfor's stock price will meander between $8-13 per share (well short of the $16 offer price) as a result.

If it goes back to $8, or below, and stays there, Pattison may re-offer $16 per share but not likely a penny more. Or, if it stays where it is and increases marginally, then Pattison may decide to do one or more bought deals and sell out his 51% controlling equity stake, further increasing the supply of Canfor stock.

As such, since it doesn't pay a dividend and not seeing a catalyst for upward momentum and the potential uncertainty of a possible Pattison divestment, there will be significant overhangs and impediments on the stock such that I think it's basically "dead money" for 3-7 years.

At this point, I'd call it a "sell." sf-cool

Cheers,
Doug

Disclosure: I own no lumber or lumber-related stocks, including Canfor. I have never owned such stocks and have no near-term plans to do so.

December 17, 2019
10:38 am
Bud
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what did pattison pay for his stock originally initially when did he start to accumulate canfor his average buy in cost?

December 17, 2019
11:43 am
Doug
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Bud said
what did pattison pay for his stock originally initially when did he start to accumulate canfor his average buy in cost?  

I wish I knew that. He doesn't have to tell us that. However, what you can do is do a search for the news release of his initial purchase and then look at the stock prices of Canfor Corp. at the time for the preceding 30-90 days and take the average. You'll get close to what he paid, I think.

As far as I know, he acquired most, or all, of his current position in one (or two) swoops). Now, he might've owned less than 5-10% of Canfor Corp. before he became a reporting shareholder (owning at least 10%), so wouldn't be able to tell that.

Edit: If you go to SEDI, select "view summary reports," and then select "insider information by issuer," in the first (top) box, enter "Canfor Corporation". From there, use Ctrl+F and enter "Pattison" to locate Jim Pattison.

Here you can see that he controls so many shares through which company, how many shares, and when he purchased them. His first purchase, as a reporting insider, was in 2004:

Figure 1:  Screenshot from SEDI showing Jim Pattison
Figure 1: Screenshot from SEDI showing Jim Pattison's ownership in Canfor Corporation as at December 17, 2019

Cheers,
Doug

December 17, 2019
6:43 pm
Bud
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Who would buy jims shares wouldnt it make sense for an american forest prod co. with access to the u.s. market to buy given trade uncertainty. Would canada block a foreign takeover

December 18, 2019
7:20 am
Doug
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Bud said
Who would buy jims shares wouldnt it make sense for an american forest prod co. with access to the u.s. market to buy given trade uncertainty. Would canada block a foreign takeover  

No, I don't think a foreign takeover would be blocked under the Investment Canada Act. It's just a series of "run of the mill" (pardon the pun) sawmills. sf-cool

That said, I don't expect a foreign takeover, but you have to remember there doesn't need to be one buyer for Pattison's shares. In a bought deal, a consortium of investment banks buy the shares at a set price, less a commission, and then they sell the shares (hopefully) at that price in the open market. As such, that can tend to put a ceiling on the company's stock price since there's all this new supply on the open market. Sometimes companies will do a significant issuer bid (buyback) to buy back some of that stock, to help prevent that, but Canfor isn't exactly in the best position to be buying back significant percentages of its own stock, I'd think.

Cheers,
Doug

December 18, 2019
1:41 pm
Bud
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how long do you think it will take to shakeout the arb sellers who bet on the deal days weeks?

December 18, 2019
1:43 pm
Doug
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Bud said
how long do you think it will take to shakeout the arb sellers who bet on the deal days weeks?  

That will probably be dealt with in the next 30 days, I suspect, unless they hold on to their losses until next year. For the most part, I'd say 30 days, though.

What I'm talking about is a long-term "ceiling" on this stock's stock price. It's not attractive to me at current levels; it's fairly to moderately over-valued, I'd argue.

It is, however, attractive at $8 and below.

Cheers,
Doug

December 18, 2019
3:25 pm
Bud
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Interesting vid long time forestry analyst Duncanson
https://www.bnnbloomberg.ca/shareholders-rejoice-hbc-canfor-proxy-wins-do-little-for-stock-1.1363919

Do you like West fraser better

I'll add is a floor developing for the price of lumber due to environmentalists puttin pressure on supply

https://markets.businessinsider.com/commodities/lumber-price

Recent changes to building code allowing taller fire resistent wood structures to be built, stacked town homes now go up 6 floors before it was 3

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