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Strategies & Market Trends : Value Investing

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To: Jurgis Bekepuris who wrote (54327)	11/12/2014 1:48:21 PM
From: Jurgis Bekepuris	Read Replies (2) of 78627

RYAM or risks of spinoff investing :) RYAM was spun off from RYN this summer. RYN is a timber REIT. RYAM is a specialty cellulose manufacturer. The CEO of RYN joined RYAM. RYAM is supposed to be the faster growing part. RYAM has dropped over 20% from the spinoff price. It is somewhat attractive on valuation basis although its results were not that great for Q3. Now RYN drops a bombshell: finance.yahoo.com They did internal review and had to restate 2013 results and they claim a lot kinda nasty things - like unsustainable timber harvesting to inflate results, putting inaccessible or unharvestable timber into assets, etc. They don't directly blame the past CEO who went into RYAM, but it's pretty clear where they are pointing the finger to. So now: RYN is damaged goods, since they will have to drop timber harvesting a lot to get to sustainable level. I doubt that the current price is the bottom. Probably no point to invest here. RYAM is not directly caught in restatement, but can anyone trust the CEO who inflated results in the past parent company? The valuation is somewhat attractive, but would you consider it at any price? Any thoughts on this? Buy/sell/hold on either piece? Or just move on?

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