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If a Tree Falls in a Forest, Does It Generate an Adequate Return?

Timberland investments boast an enviable record. Is there more to come?

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This is the first of two articles on timberland investments, one area of the broader forest product industry. In Part I, we will introduce readers to the asset class, its risk and return characteristics, and recent investment trends. We'll also take a brief look at publicly traded timberland owners  Weyerhaeuser (WY),  Plum Creek Timber  (PCL), and  Rayonier (RYN), which collectively own 16 million acres of United States timberland.

Timberland is an unusual asset. In some ways, it's a lot like a copper deposit or oil reservoir, since resource extraction can be deferred, allowing inventories to be "warehoused" when pricing is soft without risk of obsolescence or spoilage.

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Daniel Rohr does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.