If a tree falls in the forest, would Wall Street hear it? How about if the tree is occupied by a tree-sitter? Will Wall Street hear the cries and common sense of activists?
As every man on the street knows the US economy suffered historic drops in value and confidence over these last 3 years. And with President Bush's continued economic policies things don't appear to be getting any better quickly. Still investors are back in the market, and some sectors of the market are showing signs of recovery.
Over the last 5 years Maxxam Corp under performed every stock exchange in the US. How much of the decline in value of Maxxam Corp is attributable to the broad market decline, and how much of the decline is attributable to activist's efforts to expose Maxxam's negligent business practices and unethical management?
Through the early 1990's Maxxam stock value grew significantly greater than the Dow Jones and American Stock Exchange. By the mid 1990's the pace of the broad markets increased while Maxxam's growth rate declined. About this time Earth First's forest campaigns really started to bring activists and awareness to the destructive practices of Pacific Lumber. Were socially responsible investors beginning to see the real costs and returns of their investments?
The sharpest decline in Maxxam's stock came with the signing of the "Headwaters Deal" in March of 1999. It appears that investors felt that the wholly owned Pacific Lumber would be a liability to Maxxam Corp. if either sustainable forestry practices could not be implemented, or if the current management of Maxxam and Pacific Lumber Company proved a failure at implementing the plan. Since that time Maxxam Corp has lost almost 80% of its value, while even the worst US stock market exchange's losses average around 30%.
However it seems that Maxxam is once again in favor. Maxxam is a highly recommended by investment advisors and is expected to outperform the market over the next year. Is this due to the company being so undervalued at this point that it can't get any lower? Or are other factors at work?
Certainly the settlement with the Office of Thrift and Supervision on such favorable terms to Maxxam Corp delighted shareholders. And while Maxxam's management team managed to have the lowest grade possible when assessed by independent observers, the divestiture of Kaiser Aluminum may bring Maxxam Corp stock into favor again. Apparently bankrupting a domestic operation and moving workers offshore is considered good business. And threat of lawsuits from District Attorneys and citizens don't appear to dampen Maxxam stock.
Maxxam Corp's current financial statements show a sharp increase in revenue from their Forest Product's Operations. It is certain that in the current economy Maxxam's increased cash flow's are attractive to Wall Street.
So only by occupying the trees and preventing the harvest of timber can activists hope to demonstrate to Wall Street that Maxxam is a bad investment.
I wish that bad management; bad faith business practices with workers, and destruction of the environment would be enough to drive investors away. But it appears Wall Street will only listen to the sounds of an empty cash register.
-Bob DiMiceli
