Interfor (TSX:IFP, Financial) is the fourth largest lumber producer in North America. While headquartered in Vancouver, B.C., the company has a fairly balanced production profile with nearly two thirds of its lumber capacity located in the United States. Interfor has participated in a consolidating industry by making a number of acquisitions, growing the proportion of its production located in the US south. The recovery in US single-family housing starts has been sufficiently weak so as to keep lumber prices low by historical standards. Lumber prices are currently at levels sufficient to have caused recent US lumber mill shutdowns. Our expectation is that US single family housing will continue to improve, benefiting the North American lumber industry in the form of improved utilization rates, improved profitability and continued merger and acquisition activity. Interfor would make a terrific acquisition for several industry participants. In the meantime, Interfor will continue to be stewarded by one of the industry’s better management teams.
From Third Avenue Management (Trades, Portfolio)'s fourth quarter 2015 International Value Fund commentary.
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