Research

Paper and Wood Products

The paper and wood products industry is a mature group of commodity businesses with little growth, and in some cases, dramatic demand decline (newsprint, for example). Yet historically, there has been little correlation between demand growth and stock performance, and often little correlation even between commodity prices and demand.  Two decades of M&A have improved the situation somewhat, but large discrepancies in stock performance tend to be explained mainly by vastly different capital allocation decisions, even among direct competitors, and structural inefficiencies brought about in large part by the M&A decisions of large producers.  Our analysis focuses mainly on the structural and behavioral differences which help explain historical performance gaps, but also provide significant insight into expected future behavior and performance. 

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