Portfolio Manager Robert Hordon of First Eagle Investment Management says Plum Creek Timber Co. Inc. (PCL), one of the largest private landowners in the U.S., is now one of the top 10 holdings of his firm’s Global Income Builder Fund.
“As a firm, we have been involved with it for many years. We find Plum Creek attractive for several reasons,” Hordon said. “First, from a valuation perspective, we think the prices that are currently being paid for timberlands in the private market would support a materially higher valuation for the company as a whole, along with the potential for selling land for higher and better use purposes, such as real estate development.”
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Hordon also says that over time he expects the company’s earnings power to trend up thanks to a strengthening timber market. Additionally, he finds Plum Creek’s capital return to be an important part of its story.
“The dividend yield here is about 4%, and the company is committed to share buybacks and has an ongoing share buyback program,” Hordon said.
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