In short: A third idea, deliberately floated with less conviction than the other two. "We think Weyerhaeuser could also be a contrarian REIT pick. I'm not as bullish on this one because the stock will not likely move too much, but it looks like it's bottoming." The frame: it "operates at the intersection of a cyclical trough — depressed single family home building — and structural undervaluation, trading at a significant discount to its underlying private land values. Unlike traditional equity REITs which collect recurring office or apartment rents, Weyerhaeuser is a timberland REIT, meaning its earnings function as a call option on housing activity, single family construction, and commodity lumber pricing." The assets: 10.5 million acres of US timberlands plus a wood-products arm making lumber, OSB and engineered wood. The leverage: "just a $10 MBF change in lumber prices adds about 50 million in annual EBITDA," and "a $10 MSF change in oriented strand board adds about 30 million" — and "single family home construction requires roughly three times more lumber per unit than multi-family apartments," so a rate-driven return of single-family starts expands margin upstream and downstream at once. The valuation: "Weyerhaeuser trades at a 30-40% discount to its private land NAV. Investors who buy ahead of a housing market turnaround effectively buy millions of acres of prime real estate at a steep markdown relative to private transactions." The self-help: strategic land solutions EBITDA guidance raised to $450 million from "selling and leasing acreage for solar and wind development, carbon capture and higher-and-better-use real estate sales." And the payout mechanism: a 3.5% quarterly base dividend plus a variable dividend targeting 75-80% of annual free cash flow — "so the dividend could go up dramatically by this formula if the EBITDA were to inflect higher… you could see massive special cash payouts in a housing bull market." Timing, in his own words: "if you were to see a cyclical change in housing demand after interest rates peak, going into 2027 — so we're early on Weyerhaeuser." Note the crosscurrent from his own macro section: mortgage rates "could easily go above 7%" per First American's Mark Fleming, and private construction outside data centres is declining.
Weyerhaeuser owns 10.5 million acres of American forest and the mills that turn the trees into lumber, plywood-substitutes and engineered beams. It is structured as a real estate investment trust, but it is nothing like an office or apartment landlord collecting monthly rent. Its profits rise and fall with how many houses America is building, which makes owning the shares closer to owning a bet on a housing recovery than owning a property portfolio — Singh calls it "a call option on housing activity."
The reason a small change in the housing market produces a large change in profits is that the company both grows the wood and mills it. A $10 move per thousand board feet in the lumber price adds about $50 million of annual earnings; a similar move in oriented strand board adds about $30 million. And detached houses use roughly three times more wood per home than apartment blocks — so if mortgage rates fall and builders return to single-family homes specifically, the effect compounds.
Meanwhile the land itself is worth more than the stock market says. When timberland changes hands privately, buyers pay considerably more per acre than Weyerhaeuser's share price implies — a gap of 30-40%. So you are buying millions of acres of prime forest at a discount to what a private buyer would pay for it, and being paid to wait: the company pays a 3.5% base dividend and tops it up with a variable one designed to hand back 75-80% of its free cash flow, which means the payout would rise sharply if earnings inflected. It is also monetising the land in ways that do not depend on lumber at all — leasing acreage for solar and wind farms, carbon storage, and selling parcels for development, a business it has just guided to $450 million of earnings this year.
Singh is careful not to oversell it. "I'm not as bullish on this one because the stock will not likely move too much, but it looks like it's bottoming," and the trigger — mortgage rates falling — is not here yet; his own analysis on the same call says rates could go above 7%. He puts the inflection in 2027, and says plainly: "we're early on Weyerhaeuser."
Full passage: premium transcript (PDF).
In short: Inaugural AIA Permanent Portfolio holding — "I do own it. It is the first addition to the AIA Permanent Portfolio." ~10.4M US acres as a REIT; an asset play, not an earnings play — trees compound 3–8%/yr and "in-grow" into higher-value log classes, harvests can be deferred "on the stump," and the same acre carries CCS pore space, wind/solar leases, carbon credits, minerals and development conversion. Trough 2025 adjusted EBITDA ~$1.02bn makes the P/E look high; a $2,500–4,000/acre blend implies $26–42bn of gross timberland.
Weyerhaeuser owns roughly 10.4 million acres of American forest — an area about the size of Switzerland — and sells the logs. It is structured as a REIT, a company that owns property and passes most of its income to shareholders as dividends.
The reason Polomny bought it is not this year's profits. Housing is in a downturn, so lumber demand is weak and the company's earnings look bad; on a normal price-to-earnings basis the stock looks expensive. His point is that you are not buying the earnings — you are buying the land, and the land keeps working whether or not anyone is building houses. Trees add roughly 3–8% more wood every year on their own, and as they get bigger they graduate into more valuable categories (pulp for paper becomes small sawtimber, which becomes big sawlogs worth far more per ton). So the inventory grows in quantity and in quality while you wait.
Better still, timber is one of the few commodities you can leave in the ground. An oil well produces whether you like today's price or not; a forest can simply not be cut — "stored on the stump" — until prices recover. That is a free option most producers don't have.
Then there is everything else the same acre can earn. Underneath the Southern forests, Weyerhaeuser owns the rock formations where captured carbon dioxide can be pumped and stored (187,500 acres are already under an exploration agreement) — the trees keep growing on top while the basement collects rent. Add wind and solar leases, carbon credits, gravel and mineral royalties, hunting permits, and the option to clear a parcel and sell it as land for houses, factories or data centers at a price far above forest value, on land carried on the books at decades-old cost.
The honest catch, which he states himself: none of that moves the share price next quarter. Housing, lumber prices and interest rates do. This is a hold-for-years asset, which is exactly the job of the new Permanent Portfolio.
In short: Bill — not owned ("trust-fund stock"). One of the two worst performers of his Seattle years (with Puget Sound Energy). ~120–160 heirs live off the dividend, so it's "run like a trust fund." Prefers West Fraser; "if Jim Pattison ran Weyerhaeuser, we'd probably buy it."
Weyerhaeuser owns one of the best tree-farming operations in the world, but Smead won't own it — he calls it a "trust-fund stock." Roughly 120–160 family heirs live off its dividend, so it's run to feed that income rather than to maximize value, and it was one of the worst performers of his 40 years in Seattle. He prefers West Fraser, and says only a great capital allocator like Jim Pattison at the helm would change his mind.
1:03:21And and then Warehouser — has the most fabulous uh farming operation in in the practically in the world, right? Trees. They they they they farm trees. — Yeah. And all they care about there's like now probably 120 heirs or 160 heirs that get fed divid they live off the dividends off warehouser so they run it like it it's only fun it's a trust fund stock and and — so he really had to sell west Fraser to you — well no it it it it makes complete sense it's — we own the home builder so a lot of this is do with housing so if housing's in a
In short: "I'm not saying to go buy this" — a teaching case for his watch-list method. Lumber at decade lows, the chart "a waterfall," but reportedly trading below the value of its timber, and timber "stumpage" compounds ~6–8%/yr. Goes on the watch list until "low prices cure low prices" and the chart bottoms.
Weyerhaeuser is one of the largest owners of timberland. Lumber prices are at decade lows because little is being built, and the stock has fallen in a straight line — so Polomny explicitly is not buying it yet. He uses it to show his process: when a quality company gets crushed by a cheap commodity, he parks it on a watch list and checks back every few weeks for signs the decline is ending.
What makes timber special is "stumpage" — the trees keep physically growing about 6–8% bigger every year, so the underlying asset compounds in value even while lumber prices are low. With the stock reportedly trading below the value of its timber, it's a "wait for the cycle to turn" candidate, not a buy today.
38:05It's like at decade lows. Why? Nobody's building any houses or remodeling any houses. So this is Weyerhaeuser, one of the big companies. I'm not saying to go buy this, but this is how — I want to show this. Look at how the price collapsed. It's like a waterfall. This goes on my watch list. I have a watch list of companies that I'm interested in, and I will periodically go back and look at them, because at some point the worm will turn for lumber and Weyerhaeuser.
In short: "Probably okay" — a better, higher-valuation business than the pure lumber names because it also owns timber and land (a repeatable ~3-4% yield investors pay up for). Less of a value trap, more a quality hold.
Weyerhaeuser is a giant U.S. forest-products company. Robotti calls it "probably okay" — a higher-quality, more expensive name than the pure lumber producers because it doesn't just mill wood, it also owns the timberland itself.
Owning the land gives it a steady, repeatable income stream (a ~3-4% dividend yield) that investors are willing to pay up for. So it's less of a deep-value "trap" and more of a quality hold — the safer, lower-upside way to play the same lumber theme as the cheaper Canadian names.
59:42But again that is a value trap trapped until the price of lumber goes up because the demand then exceeds the supply, which is visibility to that happening. That's when the earnings will be there and that's what you do and you pay a fraction of what the power of the business is. — But people should be looking at Weyerhaeuser and Sierra Pacific and a lot of these names.
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