Private Equity
Andrea Alms Video: Money In Motion 122 - Timberland Investors Portfolio Market
September 2024 - Private Equity
TRANSCRIPT
Hello, my name is Andrea Alms. I'm a technology investor and financial manager and this is your money in motion. Long ago I was told that if I wanted a job at Princeton Endowment and got the interview to talk about timber. As I encounter more and more endowments, I started to wonder. An observation. According to Forest Economic Advisors,
Princeton University is in the midst of its largest campus expansion since the early 1960s. With 16 projects currently under construction and targeted for completion by 2029, Princeton University alum Weekly reported it in February 2020 for edition. Mass timber is being utilized in many of the structures, according to the endowment reports. They invest along the lumber timber markets, for example, commodities, funds, carbon credits and real estate. What is it? Mass timber products are solid structural load bearing components such as column beams and panels.
They are typically manufactured offsite in factories by fastening multiple layers of wood together with glue, dowels, nails and are engineered for high strength. Timberline investors need to pay close attention to lumber prices. The typical chain of events one. Higher lumber prices causes mill sawmills to increase lumber production to make more money from higher prices. Two to increase output mills by more saw timber, which are logs greater than 8in or 20cm in diameter.
Three timberland owners are willing to sell more timber if mills buy at higher prices. For the higher end result is that the higher sawmill prices improve the harvest, income and capital appreciation generated by a timber land investors assets. So yes, higher lumber prices equals greater returns. However, it is a 1 to 3 quarter lag in returns and a harvest crisis may disrupted.
Majority of investors of endowments are timberland investors. Whether you're pitching biotech software or fintech assets, keep in mind your audience because their heads literally might be in the woods. Thank you. This is your money. Your money in motion.