Rayonier shares are undervalued relative to underlying asset value; trading near book price despite higher real asset worth creates a bull case.

Firstly, the trees continue to grow, which will eventually increase the size of the harvest and contribute to increasing the value of Rayoneer shares. But at the same time, when timber prices are unattractive, management can postpone harvesting those trees to a later time.

Therefore, this real estate investment fund acts as a hedge. You possess a real asset that society will continue to need.

However, it is no secret that the housing market is not in its best shape right now. Sellers far outnumber buyers, and it all comes down to the Treasury yield curve because mortgage loans are much more expensive now.

But what makes Rayoner interesting is from a valuation perspective. What we are looking at now is the ratio of the share price to its book value, and this is what many people resort to initially when evaluating this company.

But the book value reflects the accounting values. Forest land purchased years ago may have a completely different market value today. Therefore, we can see from the ratio of the share price to its book value that its shares are trading at approximately their book value.

But it is very clear that the value of the assets they acquired has increased over time. So what does that mean? This means that, at its current prices, the company is very likely to trade its shares at a price lower than the total value of its underlying assets.

Therefore, this is a very valuable investment opportunity. It is a unique origin. Although forest land and timber prices have fallen significantly, especially in the last few months, the premise of this deal is simple: the value of the underlying assets is very likely to be higher than the value of the entire company.

So, to be perfectly honest, this is not a stock I plan to add to my personal portfolio, but I certainly think it's an interesting case study.