3. PotlatchDeltic Corporation (NASDAQ:PCH)
Number of Hedge Fund Holders: 26
PotlatchDeltic Corporation (NASDAQ:PCH) is one of the largest lumber REITs and owns over 1.8 million acres of timberlands across the United States. PotlatchDeltic Corporation (NASDAQ:PCH) is undervalued, pays dividends, and has solid free cash flows. As of October 7, the stock has a trailing twelve-month PE ratio of 7.56 and is offering a forward dividend yield of 4.14%. The company has free cash flows of $405 million. On August 31, PotlatchDeltic Corporation (NASDAQ:PCH) announced a share buyback program of $200 million. PotlatchDeltic Corporation (NASDAQ:PCH) is one of the best lumber stocks to buy now.
On September 20, BofA analyst George Staphos revised his price target on PotlatchDeltic Corporation (NASDAQ:PCH) to $53 from $55 and maintained a Neutral rating on the shares. The stock has a consensus Buy rating among Wall Street analysts.
At the close of the second quarter of 2022, 26 hedge funds were bullish on PotlatchDeltic Corporation (NASDAQ:PCH) and held stakes worth $126.5 million in the company. This is compared to 21 positions in the previous quarter with stakes worth $54 million. The hedge fund sentiment for the stock is positive. As of June 30, Millennium Management is the largest shareholder in PotlatchDeltic Corporation (NASDAQ:PCH) and has stakes worth $30.5 million in the REIT.
Here is what GreenWood Investors LLC had to say about PotlatchDeltic Corporation (NASDAQ:PCH) in its second-quarter 2022 investor letter:
“PotlatchDeltic Corporation (NASDAQ:PCH) was by far the largest detractor from our performance in the second quarter (generating 9.7% of portfolio weighted losses for us). You can imagine the surprise we had, as the company hosted its first capital markets day (CMD) in seven years. It appears someone was motivated to start short position in June, just before this CMD.
From the insider’s perspective, this looks incredibly short-sighted. While the first quarter was not up to our standards, the team pulled it together, and reiterated profit guidance for the year. The guidance implies it will be the fastest growing of its peers this year, and we have worked hard with the management team to ensure this best-in-class growth sustains. Looking further out, the company guided towards roughly doubling operating profit in the next few years, comfortably above where consensus forecasts laid at the time. What we think is the most important about the guidance, was that it was given in a period where we were experiencing recession-like conditions. Thus, as opposed to the capital markets days of the tech companies last year, this outlook is built-up through conservatism.
What’s more, is that the CMD was not a “sell the news” event. As the managers alluded to, there are important balance sheet restructuring initiatives well underway. Indeed, they have been worked on for years. Those with the most knowledge of the company, those that sit on the board, have decided to upsize the buyback program, as we personally believe current prices to be a gift. They attribute zero value to the operating business, which is in the process of becoming less capital intensive, all while committing to getting to net zero in carbon emissions by 2030…”(Click here to read full text)
