For the patient and/or the brave, Motley Fool Hidden Gems recommendation Neenah Paper (NYSE:NP) has finally started to pay off. It's not up a lot on a full-year basis, but folks who bought in the dead of winter have enjoyed a healthy rebound. See what can happen when a company gets serious about containing costs and turning over all the rocks in the search for value?

That's not to say that operations have completely turned around. We're still talking about a 16% decline in sales and ongoing compression in margins from higher energy and material costs. That said, though, the company doubled its cash flow from operations this quarter and seems to have ratcheted down the capital spending.

The pulp business is still something of a basket case. Sales were down 28%, in part because of the shutdown of Terrace Bay, though the company shrank its operating loss. That's a tough business to be in when you do less business (in volume and revenue terms) and yet lose less money. In the fine paper and technical segments, the main takeaway point is that high expenses are still impairing any sort of real operating recovery.

A couple of other news items have come out, though, that are just as significant as the earnings themselves. First, the company looks to be selling about half a million acres of Nova Scotia timberland for $140 million. That price seems a little low, but I also realize that northeastern timberlands are comparatively less valuable (which is probably why companies like Rayonier (NYSE:RYN) and Plum Creek (NYSE:PCL) prefer the northwestern and southeastern U.S.).

The company also announced a tentative plan to transfer the recently closed Terrace Bay mill to another company (Buchanan Forest Products). If I'm reading the release correctly, Neenah will actually be in effect paying to get rid of this asset -- it'll be transferring funds to Buchanan that it had earmarked for covering the closure of the plant.

If this works out (and it seems subject to several contingencies, including negotiations with the union), it's probably a win for everybody involved. Neenah gets rid of an albatross, Buchanan gets a producing asset, and the workers get their jobs back. I'm no expert in the economics of northern Ontario, but I've got to think that'll be a big positive for the workers and communities in that area.

Turning back to Neenah, this stock still strikes me as a risky bargain. There's definitely value here (as we've seen with the recent run-up), but not quite enough to get me excited. If you want to take a flier on paper, I think there are other options with a better risk/reward slant.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).