Deltic Timber (DEL)

(Top Pick Jul 16/13, Down 0.99%) In this business if you get it right 2 or 3 times you are doing well. He got out. It was the most leveraged play on the US housing. No one covers it. It didn’t pan out.

(A Top Pick July 16/13. Down 8.03%.) What he had liked was that they were vertically integrated. They own sawmills in Arkansas and he thought this would give them a lot of operating leverage in the US housing market. He came to the conclusion that they were not going to be able to earn ROE over the full course of the cycle and sold his holdings.

Likes this very much. A US listed vertically integrated timber play, primarily in the Southeast US. Has a lot of leverage to the US housing and lumber cycle. J.P. Morgan came out with some very significant reports last Thursday. The most leveraged segment of the lumber cycle is the mills. This is a name to play if you believe in the US housing and lumber story. Completely undervalued.

(Top Pick Jul 16/13, Down 0.54%) Now is the time to own them. They earned as much in Q2 as they did in all of last year and that is generally their weakest quarter. It is a play on the US housing market. They sit on a large real estate portfolio.

Owns an MDF (medium-density fiberboard) plant in Arkansas as well as some timberland and two lumber mills. Benefits from the US housing recovery in the US. Has a property development which it built a number of years ago. Hasn’t sold off much in the last couple of years but is now selling off these properties again. Thinks the explosion in profitability in the mail segment is just starting to come through.