Rayonier Inc

Rayonier and PotlatchDeltic completed their merger in the quarter to become our largest single position in the Fund. While the combination of the pre-merger-close price move up in PotlatchDeltic and the post-merger-close price move down in Rayonier did not combine to make this a large detractor, it is worth noting the post-merger weakness we believe did not line up with the solid value creation opportunity at a company like this. Post-merger, Rayonier has a strong balance sheet and the ability to go on offense. We believe that targeted asset sales and share repurchase can drive value per share growth from here.

The Fund has identified significant opportunities in the global timber industry, viewing timber as a scarce and needed asset that is undervalued by the markets. Rayonier Inc is among the U.S.-based timber producers in which the Fund has initiated a position, alongside Weyerhaeuser Co. The manager believes that timber producers like Rayonier provide an opportunity to capitalize on market mispricing, as these companies trade at significant discounts to Kopernik’s estimates of their risk-adjusted intrinsic values.

Rayonier and PotlatchDeltic completed their merger in the quarter to become our largest single position in the Fund. While the post-merger weakness did not align with the solid value creation opportunity, timberland remains a great long-term store of value. Post-merger, new Rayonier has a strong balance sheet and the ability to go on offense. We believe that targeted asset sales and share repurchase can drive value per share growth from here.

We initiated positions in both Rayonier and PotlatchDeltic in the quarter. Rayonier was an immediate contributor. Both companies were trading at large discounts when we were buying and had multiple ways to win. We were excited to see them announce a merger of equals after quarter end. This is a rare example of win/win M&A with real synergies that grow the value per share of the pro-forma company. We expect the combined company to be our largest position, which is exciting given its combination of Business, People and Price.

We initiated positions in both Rayonier and PotlatchDeltic in the quarter. Rayonier was an immediate contributor. Both companies have been on offense with accretive share repurchase and asset sales to capture the wide gap between private and public market valuations. Now they are taking the next step to be on offense by joining forces. We expect the combined company to be our largest position, which is exciting given its combination of Business, People and Price.

We initiated a position in Rayonier and continued to own PotlatchDeltic in the quarter. New position Rayonier was an immediate contributor. Both companies were trading at large discounts when we were buying and had multiple ways to win. We expect the combined company to be our largest position, which is exciting given its combination of Business, People and Price.