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Invasive earthworms at the root of sugar maple decline

Invasive earthworms at the root of sugar maple decline | Timberland Investment | Scoop.it

A new study suggests that non-native worms are eating up the forest floor, causing sugar maples to die back and perhaps harming other forest dwellers. The worms crawl in, the worms crawl out, and corpses aren't the only casualties. A Michigan Technological University scientist has fingered non-native earthworms as a primary culprit in the decline of an iconic American tree.

 

 

Sugar maples are prized as much for their valuable lumber as for their sugary sap and dazzling fall colors. In Michigan alone, they are the basis of a multi-million-dollar industry. But several years ago, foresters began noticing that the crowns of the big trees appeared unhealthy, with bare limbs and little new growth.

 

"They were losing trees before they could harvest them," said Tara Bal, a research assistant professor of forest resources and environmental science. "We wondered what was causing it." Her findings were published July 26, 2017, in the journal Biological Invasions.

 

Drought was a suspect—the traditionally damp northern Great Lakes region was in the midst of a dry spell. Other potential causes were forest management practices, soil types, climate change and the mix of species in the area.

 

From 2009 to 2012, Bal made annual visits to more than 100 sites in Michigan's Upper Peninsula, northern Wisconsin and Minnesota. She found one factor that stood out: the condition of the forest floor. And nothing affects a forest floor quite like earthworms.
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Before worms invade, the soil in a typical northern forest is blanketed by a thick layer of leaf litter and other organic material. When worms arrive, they quickly gobble it up and expose bare dirt. "And earthworms really like sugar maple leaves," Ball said. "They are sugary, soft, and have fewer tannins than other trees, like oaks."

 

Sugar maples have a particular characteristic that makes them even more vulnerable to earthworms. Ninety percent of their roots are in the top few inches of soil, so the trees rely on the litter to keep the soil from drying out. With the litter gone, maples can slowly die of thirst.
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That could mean a return to diversity; sugar maples did not always dominate northern hardwood forests. "We have pure maple stands because it's a valuable wood," she said. "If some of the sugar maple dies back, you could have the return of other species, like basswood, birches and ironwood.
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The study was conducted in the Hiawatha, Ottawa, Superior and Chequamegon-Nicolet National Forests; Baraga State Forest; and commercial forestland owned by the Boston-based investment firm GMO.

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Timber Investing: ‘Green Before Green Was Cool’

Timber Investing: ‘Green Before Green Was Cool’ | Timberland Investment | Scoop.it
The housing market last year didn’t bode well for one valuable resource — timber — but that is only one ring in a tree’s long life. The advantage in investing in timber as an asset class is optionality: Unlike other farm products, you can harvest your product when the price is right.

As the sustainable investment market continues to grow and gain importance in the financial world — Morningstar just released a report that more than $6 trillion in U.S. assets under management today incorporate sustainable investment factors — timber grows in stature as an asset class. As Doug Donnell, national timberland executive of U.S. Trust, notes: “Timber was green before green was cool.”

Investing in timberland is made for the long haul, and definitely for high-net-worth individuals or funds. Donnell says that U.S. Trust, which is part of Bank of America’s private wealth management group, asks clients to stay in the investment for 10 years to get the best return and requires a $5 million minimum. The payoff, however, can be worth it. Investors typically can get about an 8%-10% annual return, says Donnell.

GMO, co-founded by Jeremy Grantham, is another asset management firm involved in timber. It just released its seven-year real return forecast, which predicts that timber will be the best performing asset class with an estimated 4.8% per year return. In contrast, it forecast losses for U.S. large- and small-cap stocks.
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New Forests in pole position for Forest Enterprises Australia race

New Forests in pole position for Forest Enterprises Australia race | Timberland Investment | Scoop.it

NEW Forests' successful raising of $707 million for a second fund adds weight to suggestions it could be competing strongly to buy Forest Enterprises Australia, which is on the market through advisory firm Gresham, and potentially the Gunns portfolio.


New Forests has previously been named by sources as among the five groups in the contest to buy FEA.


The other four are international contenders, including US-based Campbell Group, GMO Renewable Resources, Global Forest Partners and Resource Management.


FEA was put on the market in December through Gresham and Deloitte, shortly after timber company Gunns came up for sale.

The sales price for the forestry business could be anywhere between $200m and $400m, sources said.


Initial bids closed last month for the 97,900ha of mature hardwood forests and 46,000ha of land in NSW, Queensland and Tasmania.

It is thought that the players competing to buy FEA would have also thrown their hat in the ring to buy the $400m-odd portfolio of Gunns forestry assets, which are being sold through investment bank Moelis and Korda Mentha.


New Forests would not comment on its interest in either of the offerings.

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Jeremy Grantham, the chief investment strategist at GMO, warns investors about dwindling resources

Jeremy Grantham, the chief investment strategist at GMO, warns investors about dwindling resources | Timberland Investment | Scoop.it

He called the Internet bubble, then the housing bubble. What alarm bell is Jeremy Grantham, the chief investment strategist at GMO, ringing about now?

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"...Forestry is not a bad bargain, a little overpriced maybe, but it's in a world where everything is overpriced today, once again, courtesy of incredibly low interest rates that push people into investing. A wicked plot of the Federal Reserve."


Via Jack D Bridges
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Jack D Bridges's curator insight, September 20, 2013 11:20 PM

There will be some smirks among asset managers reading this interview. "Why should I listen to this perma-bear now," they might laugh.

 

Well, if these money-runners had brains, they would thank the Fed for shoving asset prices past historical norms, sell the nosebleed expensive pieces of their portfolios (tech, consumer discretionary, etc.) and then learn a few things from Mr. Grantham. 

 

You see, Mr. Grantham has "missed" equity market rallies before. However painful, it misses the point of what GMO delivers for its clients: steady, solid risk-adjusted returns over time. 

 

Particularly for small investors, Grantham is an important read. One can assemble a basic hard asset based equity portfolio, simply by reading this interview (OK, so a bit of research & stock-picking is required, too). 

 

Sadly, applying obtuse labels is quite common in the investment business. It's a shame, because great ideas are always found from both optimistic, and more realistic, analysts. In this case, with so much optimism priced into US equities, it's a much better time to focus on what can go wrong with an investment, rather than what can go right. It's just common sense. 

 

Do yourself a favor: if you don't already know Jeremy Grantham & GMO, now is a good time to get acquainted.

 

 

 

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NZ state pension fund looks to buy forest from Harvard

NZ state pension fund looks to buy forest from Harvard | Timberland Investment | Scoop.it

New Zealand's state pensionfund is in talks to buy total control of the country's biggest commercial forest estate from the United States' Harvard University investment arm...


The New Zealand Superannuation Fund said along with global investment company GMO Renewable Resources it was in talks with Harvard Management Company to buy its 60 percent stake. The fund already owns the minority 40 percent stake in the 170,000 hectare (420,000 acres) Kaingaroa commercial plantation in the central North Island.

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The Rohatyn Group to Acquire GMO Renewable Resources

The Rohatyn Group to Acquire GMO Renewable Resources | Timberland Investment | Scoop.it
The Rohatyn Group (“TRG”), a specialized asset management firm focused on emerging markets, global investment management firm Grantham, Mayo, Van Otterloo & Co. LLC (“GMO”), and GMO Renewable Resources, LLC (“GMORR”), a joint venture between GMO and the GMORR principals that invests in forestry and agriculture opportunities, today announced that they have entered into a definitive agreement whereby TRG will acquire the GMORR business from GMO and the GMORR principals. Under the agreement, the team from GMORR is expected to move, intact, to TRG. GMO, which currently owns 51% of the GMORR joint venture, with the GMORR principals owning 49%, will retain its investments in funds managed by GMORR.

Founded in 1997, GMORR provides investment opportunities in forestry and agriculture investing. The team, led by founder and Managing Director Eva Greger, manages sustainable investments in hardwood and softwood forests of various species, as well as direct investments in rural land, crop, and livestock assets that produce food, fiber, and energy. GMORR manages approximately $2.1 billion in rural real estate assets across eight countries and 600,000 hectares. Thirty-four percent of GMORR’s assets under management are invested in emerging markets.

Since TRG’s inception in 2002, the firm has opportunistically expanded its expertise, both organically and through strategic acquisitions, to encompass a full range of emerging markets investment strategies, including private equity and credit, real estate, infrastructure, fixed income, and hedge funds. The firm’s sophisticated, international investor base includes several of the world’s most respected sovereign wealth, pension funds, and financial institutions. The addition of GMORR will further enhance TRG’s investment capabilities and product offerings and complement its institutional investor relationships. Following the transaction, the firm will have more than $6.6 billion in total assets under management and a global footprint of 18 offices worldwide, including new offices in Boston and New Zealand.
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Investors bet the farm on agriculture

Investors bet the farm on agriculture | Timberland Investment | Scoop.it

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The Renewable Resources fund at GMO started adding agriculture to its timber portfolio in 1998. This is a big advantage in marketing terms, since it has an established record, unlike many funds. “When you look at the universe of managers, the first challenge is the lack of record, the lack of clarity about whether they can actually manage operationally,” says Ms Zinurova.


Although timber and agriculture have many similarities, with both depending on biological growth for the larger part of the yield, timber is much less vulnerable to price volatility, as the trees can simply be stored “on the stump” if prices are unattractive. A further significant difference is that the returns on forestry investment have been driven almost entirely by biological growth, with just 8 per cent driven by changes in the value of the land, according to Olivier Lebleu, head of non-US distribution for Old Mutual Asset Managers, whose subsidiary Campbell Global manages $7bn of forestry and natural resources.


That is very different from farmland, where the returns historically have been driven equally by biological yield and capital appreciation.


However, like timberland, farmland is a long-term investment. With 15 years regarded as a short lifespan for a fund, this makes private equity and property seem like short-term investments. In this time horizon, it is inevitable that sustainability becomes an issue. There is an increasing awareness of the pressures on the environment, as well as the near certainty of big increases in the global demand for food as the population grows, and demands a higher standard of living.

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The Best Bets in a Dangerous Global Market

The Best Bets in a Dangerous Global Market | Timberland Investment | Scoop.it

From a Barrons interview of Ben Inker, co-head of asset allocation at GMO:


GMO's forecast calls for timber to gain 5.9% a year, the best performance of any asset class. But timber isn't the most liquid asset, is it?


Timber is one of the least liquid assets you can find, and that's part of the reason why it has generally been priced to give pretty good returns. You can't own timber in a really liquid way. Timber REITs aren't a wonderful expression of timber. Timber companies turn out to be a lousy expression of timber. If you want to own timber, you really have to own the trees or structure it as a limited partnership that is going to actually make money as the trees are harvested. That means you are talking about a minimum of a 10- to 15-year holding period. So if you buy timber, you are going to be stuck there for awhile. You lose the ability to move to different asset classes if pricing changes. So that 5.9% forecast looks pretty today. But I wouldn't stick tons of my portfolio in timber, because maybe a year from now there are going to be some assets classes that are priced to deliver better than 5.9%.

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PPF appoints seven farmland and timberland managers

PPF appoints seven farmland and timberland managers | Timberland Investment | Scoop.it

The Pension Protection fund (PPF) has appointed seven farmland and timberland fund managers. Some managers will be funded immediately, while others are appointed for deferred investment.


The selected managers are Brookfield Asset Management, Dasos Capital Oy, GMO Renewable Resources, Hancock Timber Resource Group, Macquarie, New Forests Pty, and Stafford Timberland.

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PPF executive director for financial risk Martin Clarke said: “We now have an investment portfolio worth more than £12bn and the size of our assets means that we can take advantage of a broader range of investment opportunities.

“Investing in farm and timberland will complement our existing alternative investment portfolio, allow us to diversify our investments more widely and make our portfolio more resilient.


“But we do need to be aware that there are some risks in these asset classes, for instance land price risk. Therefore, our approach will be to invest conservatively – which is consistent with our overall low-risk strategy.”


The proportion of PPF assets allocated to farm and timberland will vary over time and depend on the opportunities available now and in the future, the fund said. All managers are appointed for four years, with the flexibility for two extensions of up to two years.

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This week's featured TIMO: GMO LLC - Renewable Resources

This week's featured TIMO: GMO LLC - Renewable Resources | Timberland Investment | Scoop.it

GMO, founded in 1977, is a privately held global investment management firm servicing clients in the corporate, public, endowment, and foundation marketplaces. As of December 31, 2011, we managed $97 billion* in client assets using a blend of traditional judgments with innovative quantitative methods to find undervalued securities and markets.

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[Editor's note: our "Featured TIMO" series does not imply an endorsement of the subject organization. It is presented only to help educate readers about this corner of the Timberland Investment space.]



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