Prentiss & Carlisle is one of the largest timberland asset managers in North America. P&C provides ongoing management services on approximately 1.5 million acres of timberland located in Maine, Vermont, New York, Michigan, Wisconsin and Quebec. Nearly every acre under management is certified by the Forest Stewardship Council through either our clients or through P&C itself, which holds FSC certificates for both Forest Management and Chain-of-Custody.
P&C provides turnkey land management from long-range forest planning through on-ground forestry, marketing of forest products, harvesting, transportation, road construction and maintenance, stump-to-mill accounting and reporting, client cash management, administration of third-party relationships, public advocacy/representation and strategic asset planning. P&C also provides specialized consulting services in related areas of expertise:
Timber inventory design, execution and analysis
G&Y modeling and timber harvest scheduling
GIS mapping and data management services
Timberland valuations and appraisals
Acquisition and disposition due diligence
Timber supply modeling
About this magazine
Our aim is to provide a gathering place for news and opinion about timberland investing. We cover both publicly traded issues including listed timber companies, real estate investment trusts (REIT's), and exchange traded funds (ETF's), and the more private world of institutional investing in timberland. Our focus is on: the rationale for investing in timberland; performance of publicly traded timber investments; timberland deals and transactions; timber supply, demand and prices, and; public policy issues that impact timberland investing. Not interested in all of these topics? You can easily filter the stories by using the Tags button above.
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A few years ago, Bonner County’s largest contiguous tract of private forestland appeared headed for development.
Clagstone Meadows – 13,000 acres of timber, lakes and wetlands – had an approved development plan that included 1,100 homes, condos and RV lots, two 18-hole golf courses and an equestrian area. The plan would have created the equivalent of a new city between Coeur d’Alene and Sandpoint, with easy access from U.S. Highway 95.
Now, however, owner Stimson Lumber is entertaining the idea of selling the development rights, valued at $12.6 million, and keeping the land in timber production in perpetuity. Proponents say the deal would help protect the region’s drinking water, retain local timber jobs and unusual forested wetlands, and allow for nonmotorized recreational access to the private property.
The deal hinges on securing financing, but the Clagstone easement has ranked high on a short list for federal funding.
“Nothing’s for sure, but we feel pretty optimistic,” said Alex Diekmann, the Trust for Public Land’s senior project manager in Bozeman, who has been working with Stimson on the conservation easement.
A Supreme Court of Canada ruling on aboriginal land could eventually have as severe an impact on North American lumber supply as the mountain pine beetle, RBC Capital Markets warned on Monday.
The court’s unanimous decision on June 26 relates to a 30-year-plus land dispute between the Tsilhqot’in Nation and the British Columbia and Canadian governments. It entitles the B.C. First Nation to dictate what logging and other activities take place on its newly recognized 1,700 square kilometres of land.
Now with an established precedent to title, the provincial/federal governments in Canada will have to consult, and gain the consent of the respective First Nation(s) when development projects/timber harvesting concern unceded land, RBC analyst Paul Quinn told clients.
He noted that B.C. has accounted for roughly 24% of North American lumber production during the past 10 years.
If the Supreme Court ruling leads to delays and limitations in harvesting sawlogs in B.C., Mr. Quinn expects a tighter lumber market and higher prices.
Drax Biomass, a wholly owned U.S. subsidiary of Drax Group plc, may elect to develop a new pellet plant in Abbeville County, South Carolina. The county recently passed an ordinance that would allow the company an option to purchase a 119 acre tract of land.
According to information released by the county, the proposed pellet manufacturing plant would be located approximately three miles from Calhoun Falls, a town on the western boarder of South Carolina roughly 60 miles northwest of Augusta, Georgia.
In February, Dorothy Thompson, chief executive of Drax, indicated her company was pursuing options to develop up to 2 million tons of additional pellet capacity, primarily in the U.S.
Old Mutual Asset Management — a well-heeled, multi-boutique asset manager with $203.1 billion in AUM, has filed for an IPO.
Old Mutual Asset Management’s roots go back to 1980, which certainly was an ideal time to start an asset management firm given that was the start of America’s massive bull market. To build scale, the firm pulled off a variety of acquisitions of boutique operators.
Old Mutual currently has seven boutiques, and each has access to the parent company’s core infrastructure, such as compliance, distribution channels, talent management and risk management.
All in all, Old Mutual funds have chalked up competitive returns.
Financials have been solid, with revenues climbing from $435.7 million in 2011 to $528 million last year, while pre-tax income went from $124.3 million to $153 million.
As for the prospects for the Old Mutual IPO, it’s still tough to tell, as few asset managers have gone public recently, and the latest one — Ares Management (ARES) — was a disappointing deal. It was priced at $19, which was below the range of $21 to $23, and the stock hasn’t moved much from there.
Still, it might be hasty to think the Old Mutual IPO will fare just as poorly. After all, the firm has a strong brand and an enviable long-term track record, not to mention a broad platform of investments.
Old Mutual IPO Notes
Expected Listing: New York Stock Exchange, ticker OMAM
Lead Underwriters:BofA Merrill Lynch (BAC), Morgan Stanley (MS), Citi (C) and Credit Suisse (CS).
So far, there are no pricing terms on the Old Mutual IPO.
The offering will likely hit the markets some time during the fall.
Sam Radcliffe's insight:
Campbell Global, formerly The Campbell Group, has 3.1 million acres of timberland under management.
Jemi Fibre Corp. (TSXV: JFI) ("Jemi Fibre" or the "Company") is pleased to announce that it has completed the first of two timberlands acquisitions from Tembec Inc. ("Tembec"), previously announced on April 25, 2014.
The Company has closed on the acquisition of approximately 17,700 hectares, and timber rights for an additional approximately 1,900 hectares, for a purchase price of $15 million. The timberlands are located in the Regional District of East Kootenay, British Columbia and are the first phase of a two phase purchase of timberlands from Tembec. The second phase is for approximately 31,800 hectares, which the Company anticipates closing in September 2014 for a purchase price of $20 million. The closing of the second phase is subject to the Company obtaining adequate financing and other customary conditions. There can be no assurance that the second phase will be consummated in whole or in part.
Phaunos Timber Fund Ltd Tuesday said it has reached a deal with Stafford Timberland Ltd to manage its portfolio of assets, after Stafford suggested some changes to its portfolio after conducting a review.
Stafford was initially employed to carry out a strategic review of Phaunos' assets, and has now completed its review. The main findings of the review included the finding that recent falls in log prices in China could hit the fund's cash flows in the second half of the year, and it should seek to exit some of its higher- and medium-risk assets on its portfolio. *** The review also found that Phaunos has interests in good quality timberland assets in Matariki, Aurora Forestal and Mata Mineira, which make up 56% of the fund's neta sset value in total and represent a good base from which to build the portfolio. However, 36% of the portfolio is made up of higher-risk assets, a bigger proportion that would normally be expected in a balanced timberland portfolio.
Stafford also warned that Phaunos is reliant on a relatively small number of mature timberland assets for annual cash flows and these assets are subject to export or single product market risk. There are several assets whose valuations are subject to significant uncertainty and a forced liquidation value could be more than 30% below the December 2013 net asset value, it added. *** [Phaunos] said it will pay [Stafford] an annual management fee of 0.35% of the market capitalisation of Phaunos shares, payable quarterly in arrears.
It is easy to harp on government and their inadequacies, but let’s face it, the biomass industry exists in the capacity that is does because of supportive government policies. The industrial pellet sector in the southeastern U.S. exists because of Europe’s climate change policies, which incentivize replacing coal with wood pellets. Yet, despite its importance, policy is not the only factor that enables and boosts growth in the biomass industry. Available feedstock and energy infrastructure, along with policy, form the backbone for growth and innovation in the biomass industry. This week’s DataPoints briefly looks at what I’m calling the “triple crown of biomass” and its regional implications. Without any one of the three components (policy, feedstock, and infrastructure), a biomass project will never be successful.
In the southeastern U.S., the swift rise of the industrial pellet export industry is due to the convergence of policy in Europe, numerous years of deferred harvest in southeastern forests, and an existing port infrastructure along the Gulf of Mexico and Atlantic.
The southeastern U.S. forest industry has had a number of pulp and paper plants close in recent decades, which has led to a decline in demand and lower stumpage fees across southeastern forests compared to other regions in the U.S. While stumpage fees for pulp wood in Mississippi were around $9 a ton in the 4th quarter of 2013, an equivalent amount of pulp wood in Maine sold for roughly double during the same time period. The higher stumpage fee in the Northeast discourages bioenergy development on the scale needed for industrial pellet export development. Instead, the biomass industry in the Northeast primarily utilizes mill residue for local biomass power generation and premium pellet production.
Despite the Northeast and the Southeast both having a strong port infrastructure, the cost of feedstock in the Northeast along with regionally supportive policy encourages local consumption of biomass rather than exporting it to a different region.
The following is a guest post from Senator Tyler Harper (R-Ocilla)
Some in the media and in politics fail to understand that just because a favored policy of a lawmaker or interest group is described as “green” does not mean it will yield positive environmental outcomes. In addition to failing to stimulate conservation, these policies also may curtail economic activity in a way that hurts many businesses and timberland owners. This can certainly be the case in the forest products industry when policy intended to promote “green building” results in the diminished use of Georgia-grown wood thus reducing the incentive to tree farmers to continue planting and managing environmentally beneficial timberland.
A good example is approach of the U.S. Green Building Council (USGBC) which has failed to heed the advice of a growing chorus of critics who take issue with its definition of “sustainable” timber. The organization’s “LEED” building rating system, which many cities, states and federal agencies use as binding guidelines for energy-efficient building projects, only recognizes a small fraction of Georgia’s wood as being sustainably managed.
Only lumber “certified” by the Forest Stewardship Council (FSC) is formally recognized by the LEED system. Wood certified by the American Tree Farm System (ATFS) and the Sustainable Forestry Initiative (SFI), by far the majority of Georgia’s certified wood, is not.
This policy can adversely impact heavily-forested states such as Georgia, whose timber industry supports 160,000 jobs. Millions of acres of our forests are certified to ATFS and SFI standards, while just over 30,000 acres are recognized by FSC.
How does it feel to have a trillion dollars burning a hole in your pocket? Ask the private-equity industry. It has been so successful in raising money from investors recently that it can't spend it fast enough.
The amount of money raised by private-equity firms but not yet invested—known as dry powder—hit a record high of $1.073 trillion globally at the end of 2013, according to data provider Preqin, an increase of $130 billion from 2012. The total has continued to grow this year, reaching $1.141 trillion globally as of the start of June. *** The influx of capital is good news for the private-equity industry, but it may not be such good news for investors. Some analysts fear that private-equity firms will struggle to invest such a large amount, resulting either in money remaining uninvested for years or in fund managers overpaying for deals, both of which could affect investor returns.
For now, that's not deterring investors. They committed $431 billion to private-equity funds in 2013, the highest amount since the financial crisis that started in 2007, according to Preqin. And that is set to continue, as 90% of investors surveyed by Preqin in December said they intend to invest either the same amount or more in private equity this year compared with last year, and 92% said they would maintain or increase their private-equity allocation over the longer term. *** In December, BDO asked more than 100 U.S. private-equity executives what their most significant challenge would be in the coming year, and the most common response was pricing, cited by 39% of respondents, up from 15% in a similar survey a year earlier. Second on the list was identification of quality targets, cited by 34% of respondents, up from 28% in the previous survey. *** The bottom line for investors: Private-equity firms may struggle to find compelling investment opportunities in such a strong market, and this could make it harder for them to achieve the level of returns that investors have come to expect.
Sam Radcliffe's insight:
While this article is not specific to timber private equity, I am quite sure timber is in the same boat as other private equity asset classes.
The Forestland Group, a leader in timberland investment and management, and Blue Source today announced the successful issuance of over 1.7 million forest carbon offsets into California’s cap and trade carbon market. Situated on over 220,000 acres in Michigan, the Blue Source Bishop Improved Forest Management project utilizes the compliance offset protocol and is the largest carbon project registered to date under California’s program.
The project will immediately deliver significant carbon revenues to The Forestland Group through pre-contracted sales made by Blue Source to companies that participate in California’s cap and trade program. *** "This project represents a number of important milestones for both the timber and carbon markets,” said Kaarsten Turner Dalby, Vice President of Ecological Services at the Forestland Group. "It provides further demonstration that sustainable timberland management can deliver strong and diverse returns on investment, and shows how private landowners across the country can benefit from emerging carbon regulations.” *** "We are excited to have completed a project of this scale which we believe provides important proof that commercial timberland operators practicing sustainable forestry can participate and thrive within the California market,” said Roger Williams, President of Blue Source.
Think of a modern cityscape and any number of materials come to mind: the glass and steel of an office tower, the stately brick and stone of a townhouse, the asphalt pavement and stark concrete canyons of 20th-century urban redevelopment.
All of these have, at some time, heralded visions of the city’s future. Now, if a growing chorus of architects have their way, the next generation of urban buildings will be crafted from an innovative, versatile structural material that’s key to sustainable large-scale development. You’d know it as wood.
In the quest to limit the energy and resource costs of construction, a number of global architects have begun designing and constructing modern buildings from a substance we now associate more with suburban homes. Thanks to novel composites, several multistory buildings have already been erected around the world with timber skeletons, and plans for taller buildings are in the works.
“We all are hard-wired to see the city as being steel, glass, and concrete,” says Yugon Kim, an architect at design firm IKD who curated a new exhibit on the benefits and possibilities of timber construction at the Boston Society of Architects’ BSA Space in Boston. “Our proposal is that we need timber to save us.”
They’ve been making a larger argument to the industry and to policy makers that to build cities with a lower environmental impact, wood is not just promising but necessary. It’s a plentiful resource that grows back relatively quickly, and even pulls carbon out of the atmosphere as it does.
CatchMark Timber Trust, Inc. announced today agreements to acquire a total of 55,671 acres of prime timberlands in two separate transactions totaling $106 million. The properties are located primarily in Middle and South Georgia (approximately 95% of the acreage) as well as North Florida. If completed, these acquisitions are expected to add 2.5 million tons of timber to CatchMark's merchantable inventory, comprising 72% pine plantations by acreage and 48% sawtimber by tons, and are expected to increase the company's annual harvest volumes over the next decade by 230,000 to 250,000 tons.
The two transactions—known as Oglethorpe and Satilla River—are expected to close during the third quarter, subject to completion of CatchMark's due diligence and the satisfaction of closing conditions, including verification of inventory and title. The transactions will be financed through a combination of CatchMark's credit facility and cash on hand. During 2014, CatchMark has acquired or entered into agreements to acquire approximately 100,000 acres of timberlands, representing a 36% increase in its total acreage relative to year-end 2013. In aggregate, these acquisitions, assuming completion of the Oglethorpe and Satilla River transactions, are expected to increase CatchMark's annual harvest volumes over the next decade by approximately 440,000 to 480,000 tons.
Sam Radcliffe's insight:
Some arithmetic: $1,904 per acre; $42.40 per ton of inventory; $442 per ton of increased annual harvest
A local investment company has withdrawn its $20 million anticipated investment in Thermogen Industries, the startup planning to build a wood pellet plant at the site of the former Great Northern Paper mill in Millinocket.
CEI Capital Management, a for-profit subsidiary of Brunswick-based Coastal Enterprises Inc., confirmed Monday that it will withhold $20 million it planned to invest in Thermogen as part of the Maine New Markets Capital Investment tax credit program. The company also announced it would withhold an additional undisclosed amount of investment in Thermogen as part of the federal New Markets Tax Credit program.
The news is the latest blow for Thermogen’s efforts to finance its $140 million wood pellet project, which it claims could provide 55 direct jobs in Millinocket. In April, it lost $9 million in state-backed financing when the Finance Authority of Maine’s board voted to reduce the amount of a bond it would sell on Thermogen’s behalf from $25 million to $16 million. The board determined that a change in production technology was substantive enough to require a new vote.
While pulpwood prices across North America are driven by competition for fiber, we tend to see higher price volatility in pulpwood prices in the Northeast and Lake States due to availability factors that are unique to these markets. These factors include:
Seasonality – Wood production tends to be volatile in these regions from one quarter to the next. This is especially true when comparing a high production first quarter to a low production second quarter...Higher delivered prices are fairly common in April and/or May as wood production is limited by weather. This 2014 winter harvest season was also longer than average with March hardwood pulpwood deliveries remaining extremely strong.
Distance Hauled – As the overall supply of hardwood increases during these months, mills are able to purchase wood originating in forests closer to the mill...Lower haul distances coincide with lower delivered prices, such as those observed over the first quarter of this year despite the competitive fiber markets over the course of the winter.
Competition for Other Species and Other Types of Fiber – Logging capacity, particularly as it relates to the “surge capacity” needed to fill inventories during the winter or when unexpected events drive inventory shortfalls, has been a pervasive topic of conversation in the Northeast and Lake States. Capacity issues such as these often affect hardwood production. The overall supply of hardwood pulpwood, for instance, is affected by aspen and softwood demand and the availability of pulp quality chips. If softwood sawmills are running more hours, this will increase the supply of softwood chips, thereby freeing up constrained logging capacity for hardwood production. This interaction affected hardwood production this winter, and the additional supply lowered prices.
Supply Agreements – Supply agreements are frequently used in the pulp and paper industry with strict requirements for deliveries that affect the price of fiber on the open market...Depending on the calculation mechanism, this can create a delayed effect on market pricing.
While these factors come into play in all regions in the North American timber industry, they are typically more pronounced in the Northeast and Lake States regions. Price volatility is therefore higher in these regions as seasonality, haul distances, competition for other species and types of fiber and supply agreements put pressure on prices from opposite directions.
Sam Radcliffe's insight:
In addition, a large portion of the Lake States timber supply is from public lands, where sales are made by competitive auctions. Auction prices are often driven by the desperation of a particular contractor or mill, increasing price volatility.
Matt Ciaschini, who oversaw $700 million of natural resource investments at Harvard University's endowment, has resigned, bringing departures of money managers to at least four since May.
Ciaschini, a vice president at Harvard Management Co., said Friday that he left last month for personal reasons to join Newark, N.J.-based Prudential Financial Inc.'s agricultural investments group. Harvard reassigned his responsibilities and doesn't plan to replace him, said Christine Heenan, a spokeswoman for the university.
A Cape Breton environmental group is calling for an emergency review of harvesting practices at Nova Scotia Power’s biomass plant in Point Tupper.
On Friday, the Margaree Environmental Association issued a letter to Premier Stephen McNeil requesting a delay in harvesting to allow the province to examine the plant’s wood supply.
Association co-chair Neal Livingston said the plant has shown itself to be a “voracious” consumer of wood fibre. Not only is quality material being directed to the plant, there is also too much forest resource being cut, he added.
NSP has said up to 650,000 tonnes of wood waste will be needed to run the plant per year. The 60-megawatt power generating station, located in Richmond County, is part of Nova Scotia’s plan to source 25 per cent of the province’s electricity from renewable sources by 2020.
But in recent months, business owners who rely on the forest for a living have told The Chronicle Herald that high-quality hardwoods are making their way into the biomass plant.
On Friday, NSP spokeswoman Neera Ritcey denied that quality hardwoods are winding up that the plant.
“We require our suppliers to follow strict conditions on the biomass they supply for use at the plant,” Ritcey said in an email. “We have checks and balances in place to ensure rules are followed.”
The Department of Natural Resources got the green light to begin selling 10,000 acres of state land. The Natural Resources Board on Wednesday approved the land sales, to take place by June 30, 2017.
The 10,000 acres available for sale represent less than 1 percent of the DNR’s more than 1.8 million acres, including easements. Proceeds from the land sold will be used to repay outstanding debt related to the Knowles-Nelson Stewardship program.
“The Knowles-Nelson Stewardship Program has done wonders for our state’s natural resources — this next step will ensure that it continues to create new recreational opportunities throughout the state,” DNR Secretary Cathy Stepp said in a statement.
The program has added more than 600,000 acres for public recreation.
Parcels with legal access from a public road will be offered for sale to local or tribal governments first and later to the general public through a competitive bidding process.
UNESCO’s World Heritage Committee has voted to protect all Tasmanian forest from logging — striking down the Australian government’s attempt to withdraw 183,000 acres (74,000 hectares) from the U.N. list of cultural and natural wonders.
Canberra claimed that parts of the forest had already been degraded by the timber industry and should therefore be fair game for further logging. However, U.N. delegates in Doha, Qatar, sided with conservationists who claimed that most of the forest was unscathed and that only 8.6% of the 3.5 million acres (1.4 million hectares) had been damaged.
Prime Minister Tony Abbott told the Australian Broadcasting Corporation (ABC) that he was disappointed with the decision, believing that the untapped Tasmanian logging would aid his nation’s already floundering timber industry. “The application that we made to remove from the boundaries of the World Heritage listing — areas of degraded forest, areas of plantation timber — we thought was self-evidently sensible,” Abbott said.
An increase in U.S. housing construction is expected to raise significantly the price of lumber by the end of the year, offsetting the depressing effect China's recent downturn in property investment has had on lumber demand.
Capital Economics, a London-based financial research consultancy group, expects prices to increase almost 30 percent, from $313 per 1,000 board feet to $400, by the end of 2014. The group attributes the expected rise to increased demand in the U.S. housing market.
Lumber's recent price weakness stems partially from China slowing down property investments. China’s “reduction in commodity-intensive activity” had a hand in the fall in lumber prices, as well as construction metals, because Chinese demand accounts for roughly 10 percent of North American production exports, Capital Economics said in a note Friday.
Lumber prices fell in May for the first time in two years. Construction is revving back up in the U.S. but slowed considerably because of the unusally cold winter, hitting a nearly two-year low in March.
While the report states the future of the U.S. housing sector looks positive and a quarter of the mills that closed in 2004 have reopened, “a significant amount of capacity is likely to have been permanently lost, as mills fell into disrepair and skilled labour moved onto other jobs. This will prevent output quickly ramping back up to 2004 levels.”
Rayonier and Wayne County have reached a settlement in their dispute over the valuation of the company’s timberland. No one is saying, though, what the settlement is.
In a joint press release released late Thursday afternoon, Rayonier and the county government announced “agreement on a settlement to their ongoing dispute regarding valuations of Rayonier-owned Wayne County timberland.” As the release noted, the dispute dated back to 2008 and involved various court proceedings. *** When Russell Schweiss, Rayonier’s director of corporate communications, was asked about the terms of the settlement, though, he responded, “Rayonier and Wayne County have resolved the long-running tax dispute on mutually agreeable terms. Rayonier is pleased with the resolution. I am not, however, at liberty to discuss the specifics of the settlement.” *** Rayonier had contended that its timberland values from the 2008 countywide revaluation were too high. In the resulting dispute, a superior court judge found that the county’s process for valuing large-acre tracts was fundamentally flawed, and the Assessors’ Office eventually had nearly 50 Rayonier tracts reassessed.
Minnesota's northern forests are expected to look vastly different a century from now -- with fewer spruce, tamarack and fir trees and more maple, oak and basswood -- due to a warming climate.
That's the finding of a major new study headed by the U.S. Forest Service Northern Research Station and released Thursday.
The study took an in-depth look at some 23.5 million acres of forest across northern Minnesota and describes both the effects of climate change that have already been observed as well as projections on what continued warming is expected to do.
The findings, which echo what many scientists already have said, are that trees already at the southern end of their range will do poorly -- including balsam fir, aspen, white spruce and tamarack.
Tree species at the northern edge of their range will do better -- including basswood, black cherry, white pine, red maple, sugar maple and white oak.
According to the report's findings, significant changes in Minnesota's climate have been documented over the past century. On average, northern Minnesota forests are seeing less snowfall but more severe winter storms. Meanwhile, minimum and maximum temperatures have been increasing across all seasons, with winter temperatures rising the most. Rainfall in the spring and fall has increased, with more of that precipitation occurring in downpours of 3 inches or more. *** The 240-page report predicts:
Temperature increases will lead to longer growing seasons in northern Minnesota forests.
The number of heavy precipitation events will continue to increase in northern Minnesota, and impacts from flooding and soil erosion may also become more damaging.
Forests may experience more drought stress during the growing season, as well as increased risk of forest fires and an increase in forest pests and invasive species.
Historically, the direction of lumber has led the direction of the stock market. If lumber prices are rising, it suggests demand for lumber is increasing, more are being built, more construction is happening, and the economy is improving. The opposite is also true.
At the very core, the direction of lumber prices can be considered as a leading indicator of the S&P 500. With that said, please take a look at the chart below. On the chart, you will see the S&P 500 in black and the lumber prices in green. You will note that whenever lumber prices went down, the S&P 500 followed and also moved lower with one exception: the present .
Since March of this year, lumber prices have fallen sharply, suggesting activity in the U.S. economy is slowing down.But the S&P 500 is moving in the opposite direction! Lumber prices are going down and the S&P 500 is moving up? That never happens.
This disparity is a sign of great concern. You can add the disparity in the direction of lumber prices compared to the direction of the S&P 500 index to the long and increasing list of historical indicators now pointing to a market that is overbought and overpriced.
Sam Radcliffe's insight:
Maybe it's my aging eyes, but I see at least three other points at which lumber prices dropped and the S&P did not: October 2009, April 2011, and June 2013.
The asset management sector is set for radical change in the next 15 years, according to a report from consultants KPMG, with the number of firms in the global market shrinking to half their current number.
In its new report, the consultancy said the asset management industry would transform because of huge shifts in client demographics and technology, as well as changing social values and behaviours.
Asset managers had been too slow to make use of new technology, and big tech companies such as Google and Amazon are in a good position to enter the sector, it said.
Tom Brown, global head of investment management at KPMG, said: “We are on the verge of the biggest shake-up the industry has experienced, and the message to asset managers is clear – adapt to change, or your business won’t survive.” *** If they are going to succeed in the future, firms have to concentrate on building “cradle-to-grave relationships” with a very different and more diverse client base that includes much younger investors, he said. *** It also said there would be a lot of new money coming into the asset management industry in the next 15 years from the growing middle classes in China, Mexico, India, Nigeria and other developing economies.
KPMG said in the future clients would demand more personalised information, education and advice from asset managers.
Sam Radcliffe's insight:
Shameless plug: P&C has focused on “cradle-to-grave relationships” since its founding in 1924 -- some of our current clients go back that far. Not sure Google or Amazon can produce the high touch required for this type of business.