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TWST: Would you please start with a brief overview of your paper and
forest products coverage.
Mr. Dillon: We cover the industry as a firm globally. We cover Europe,
Latin America, China, and North America. My area is focused on North
America and our coverage universe consists of approximately 25 names,
including some non-paper based packaging names that my colleague Tim
Thein is overseeing and our view is selective at this point. We see an
improving long-term outlook for the US industry based on the lower
dollar and a gradual, more rational capacity build globally. In the near
term, however, we believe that investors should focus on containerboard
and newsprint, because these grades are rather distant from market pulp,
which is a product that we see coming under pricing pressure in 2007 due
to a wave of new capacity. By contrast, containerboard and newsprint
will not see the same capacity pressures, at least over the next year
and a half or so. TWST: Would you review for us the main things that have happened to the
stocks so far this year, the first two quarters of 2006?
Mr. Dillon: It's been a seesaw. We generally had very strong performance
in the first five months of the year and then from mid-May until now,
mid-July, they've given back quite a bit of what they had gained, mainly
because of the macro fears that emanated from the Fed commentary in mid-
May and concerns overall about emerging markets and cyclical stocks. So
they've given back quite a bit of their previous gains, but we are
starting to see the stocks stabilize and some of them have started to
improve in the last week or two.
Tickers included in this excerpt: ABY, ARA, BOW, DB, IP, LPX, MWV, OSB, PCL, PKG, RYN, SEO, SSCC, UPM, VCP, WY
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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