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Plum Creek Timber (PCL - Get Report) is a unique REIT name too -- the $6.7 billion firm owns timber producing properties, as well as a wood product manufacturing business. Only the timberland business falls under REIT rules, with logging operations treated as a traditional taxable corporation. For all intents and purposes, though, PCL's bread and butter remains its timberland, particularly as PCL works to earn more money through recreation, development, and conservation efforts than through logging.
All in, Plum Creek owns 6.6 million acres of timberland spread across 19 states, making it one of the largest private landowners in the country. The sheer scale of Plum Creek's holdings make it unique -- and that's a big reason why the firm has been exploring nontraditional uses for its land portfolio. Logging removes considerable value from its land, whereas recreation, for instance, adds to the value of PCL's land per acre.
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PCL has done some things to ruffle some investors' feathers in recent years -- and to stoke short sellers. One of the biggest is the fact that PCL has been slowly liquidating land to generate cash for its dividend, rather than relying on more perpetual sources of profitability. While concerns are warranted, investors need to remember that PCL has only been covering its dividend shortfall during a challenging time for its alternative income strategies.
The concerns seem overblown at this point, especially given the fact that the stock's short interest ratio has ramped up to 14.5. At that level, it would take three full weeks of buying pressure for shorts to run from this stock.