David Abrams Owns 5.02% Of Specialty Cellulose Maker Rayonier Advanced

Rayonier David Abrams slide-separation-scenario

A 13G filing by David Abrams reveals that he beneficially owns 2,139,929 shares, or 5.02%, of Rayonier Advanced Materials Inc (NYSE:RYAM).

Rayonier Advanced Materials Inc (NYSE:RYAM) was spun off in June from Rayonier Inc. (NYSE:RYN), a Real Estate Investment Trust (REIT) dealing primarily in timberland assets, as well as operating two specialty cellulose mills.

David Abrams, an erstwhile colleague of Seth Klarman of the Baupost Group, manages a portfolio worth nearly $8 billion built up after 2009. (Read more on David Abrams on ValueWalk here).

Rayonier Advanced Materials investment

Rayonier Advanced Materials Inc (NYSE:RYAM) is a dividend paying company, having declared a quarterly dividend of $ 0.07 payable September 30.

The following slides from the company’s presentation describe the rationale for spinning off Rayonier Advanced Materials Inc (NYSE:RYAM) into a separate listed company.

David Abrams slide-separation-scenario

David Abrams Slide-attractive-shareholder-propositiion

The company’s recent cellulose expansion, and the fact that the CEO of Rayonier Inc. (NYSE:RYN) has moved over to take its charge, indicate that shareholders could hope to be a part of a profitable and well-managed business that is also a global market leader.

Rayonier Advanced Materials’ share price under pressure

Post-listing, the Rayonier Advanced Materials Inc (NYSE:RYAM) stock has been under pressure as shown in the chart below.

Rayonier Advanced Materials  stock-chart

On July 30, the company declared Q2 EPS of $0.59 and revenue of $213 million which missed analysts’ estimates by $0.21 and $34.7 million respectively.

The disappointing results triggered a 10% fall in price as shown by the arrow in the chart. In the press release the company commented that it was seeking to replenish 30,000 t of sales volume lost from a 2013 customer, and that costs had exceeded budget during the first half of 2014 and “will likely remain somewhat elevated through the remainder of the year,” resulting in 2014 EBITDA at about 25% lower than 2013 segment EBITDA.

Analysts at RBC Capital downgraded the stock to a Sector Perform rating, and lowered the price target from $46 to $37.

Rayonier Advanced Materials Inc (NYSE:RYAM) last traded at $32.44 and at a market cap of $1.38 billion. Post-listing it had traded up to a high of $44.18.

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Saul Griffith
Saul Griffith is an investor in stocks, commodities and forex, writing under a pen name. Saul has top accounting qualifications and extensive experience in industry and the financial markets. He also has an abiding interest in breaking news that could be a harbinger of new trends and give insight into an instrument’s potential for providing value, growth or yield.