Why Rayonier Inc. Stock Fell Hard

Is this meaningful or just another movement?

Jun 30, 2014 at 4:39PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rayonier (NYSE:RYN) plummeted 27% today after the timberland management company completed its spinoff of Rayonier Advanced Materials and received downgrades from both D.A. Davidson and RBC Capital Markets.

So what: Rayonier bulls shouldn't be too alarmed with today's drop, as the "lost value" is being reflected in Rayonier Advanced Materials' market price now that it is trading on its own. Of course, RBC Capital and D.A. Davidson still have some concerns over Rayonier's stand-alone valuation, which is probably giving some "special situation" investors a bit of pause.

Now what: Rayonier management remains optimistic about the company's long-term prospects. "While operating these businesses together provided tremendous value to our shareholders over a period of more than eight decades, we are confident that this transaction will provide even greater value for Rayonier shareholders as we look to the future," said Rayonier President and CEO David Nunes in a press release. "Rayonier has a bright future as a pure-play timber and real estate business, with excellent assets and financial flexibility that will enable continued growth." Given that both parents and their spinoff spawn traditionally trounce the market for several years following the split, keeping an eye on Rayonier and Rayonier Advanced might be a good idea. 

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