Comments on: Timberland: Growing Returns! http://streetcapitalist.com/2009/01/28/timberland-growing-returns/ Wisdom on such diverse topics as: spin-offs, merger arbitrage, post-bankruptcy equities, global macro commentary and short ideas. Thu, 10 Feb 2011 04:28:00 +0000 hourly 1 http://wordpress.org/?v=3.2 By: 52wallst http://streetcapitalist.com/2009/01/28/timberland-growing-returns/comment-page-1/#comment-4663 52wallst Thu, 30 Apr 2009 02:09:12 +0000 http://streetcapitalist.com/?p=447#comment-4663 The most popular asset class that large pension funds and endowments have been moving money into according to Pensions & Investments is timberland. So some new, potentially speculative, money is starting to move into a space that has long been ignored, at least in my perception. The recent large gains could be the result of these large inflows. I would like to point out some characteristics and risks that come with investing in the land piece of timberland, besides the obvious of illiquidity to help get a better understanding of the underlying economics of land. -First, the tax treatment allows only for capital gains and there is no tax depreciation (land is held at historical cost under US GAAP). -Second, since the land itself generates no income, expenses are capitalized. -Third, and most important to consider, there is a cost of carry (which includes maintenance, taxes, etc.) with land that must be paid with other income because land itself doesn't generate income (in this case, most likely income from the timber). The most popular asset class that large pension funds and endowments have been moving money into according to Pensions & Investments is timberland. So some new, potentially speculative, money is starting to move into a space that has long been ignored, at least in my perception. The recent large gains could be the result of these large inflows. I would like to point out some characteristics and risks that come with investing in the land piece of timberland, besides the obvious of illiquidity to help get a better understanding of the underlying economics of land.

-First, the tax treatment allows only for capital gains and there is no tax depreciation (land is held at historical cost under US GAAP).

-Second, since the land itself generates no income, expenses are capitalized.

-Third, and most important to consider, there is a cost of carry (which includes maintenance, taxes, etc.) with land that must be paid with other income because land itself doesn't generate income (in this case, most likely income from the timber).

]]> By: 52wallst http://streetcapitalist.com/2009/01/28/timberland-growing-returns/comment-page-1/#comment-5733 52wallst Thu, 30 Apr 2009 02:09:00 +0000 http://streetcapitalist.com/?p=447#comment-5733 The most popular asset class that large pension funds and endowments have been moving money into according to Pensions & Investments is timberland. So some new, potentially speculative, money is starting to move into a space that has long been ignored, at least in my perception. The recent large gains could be the result of these large inflows. I would like to point out some characteristics and risks that come with investing in the land piece of timberland, besides the obvious of illiquidity to help get a better understanding of the underlying economics of land. -First, the tax treatment allows only for capital gains and there is no tax depreciation (land is held at historical cost under US GAAP). -Second, since the land itself generates no income, expenses are capitalized. -Third, and most important to consider, there is a cost of carry (which includes maintenance, taxes, etc.) with land that must be paid with other income because land itself doesn't generate income (in this case, most likely income from the timber). The most popular asset class that large pension funds and endowments have been moving money into according to Pensions & Investments is timberland. So some new, potentially speculative, money is starting to move into a space that has long been ignored, at least in my perception. The recent large gains could be the result of these large inflows. I would like to point out some characteristics and risks that come with investing in the land piece of timberland, besides the obvious of illiquidity to help get a better understanding of the underlying economics of land.

-First, the tax treatment allows only for capital gains and there is no tax depreciation (land is held at historical cost under US GAAP).

-Second, since the land itself generates no income, expenses are capitalized.

-Third, and most important to consider, there is a cost of carry (which includes maintenance, taxes, etc.) with land that must be paid with other income because land itself doesn't generate income (in this case, most likely income from the timber).

]]> By: fernando http://streetcapitalist.com/2009/01/28/timberland-growing-returns/comment-page-1/#comment-2703 fernando Thu, 29 Jan 2009 11:44:39 +0000 http://streetcapitalist.com/?p=447#comment-2703 the market seem to care more about the dividend yield than the real value of the company the market seem to care more about the dividend yield than the real value of the company

]]> By: fernando http://streetcapitalist.com/2009/01/28/timberland-growing-returns/comment-page-1/#comment-5732 fernando Thu, 29 Jan 2009 11:44:00 +0000 http://streetcapitalist.com/?p=447#comment-5732 the market seem to care more about the dividend yield than the real value of the company the market seem to care more about the dividend yield than the real value of the company

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