GreenWood Investors’ Largest Detractor: PotlatchDeltic Corporation (PCH)

GreenWood Investors LLC, an investment management firm, released its second quarter 2022 investor letter. A copy of the same can be downloaded here. The portfolio was not performed as per the standard in the second quarter. The US-denominated Global Micro Fund was down 16.6% in the quarter, and its euro-denominated Luxembourg fund returned -17.0%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

GreenWood Investors discussed stocks like CatchMark Timber Trust, Inc. in the second quarter investor letter. On September 14, the company merged with PotlatchDeltic Corporation (NASDAQ:PCH). PotlatchDeltic Corporation (NASDAQ:PCH) is a Real Estate Investment Trust that owns timberlands located in the United States. September 16, 2022, PotlatchDeltic Corporation (NASDAQ:PCH) stock closed at $43.54 per share. One-month return of PotlatchDeltic Corporation (NASDAQ:PCH) was -10.36% and its shares lost 17.88% of their value over the last 52 weeks. PotlatchDeltic Corporation (NASDAQ:PCH) has a market capitalization of $3.519 billion.

Here is what GreenWood Investors specifically said about PotlatchDeltic Corporation (NASDAQ:PCH) in its Q2 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)

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PotlatchDeltic Corporation (NASDAQ:PCH) is in not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held PotlatchDeltic Corporation (NASDAQ:PCH) at the end of the second quarter which was 21 in the previous quarter.

We discussed PotlatchDeltic Corporation (NASDAQ:PCH) in another article and shared Longleaf Partners Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.