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Dear PM:

Company “x” is doing poorly in the stock market. Yet I see their insiders continue to buy stock. Why?


Dear Confused:

These insiders are obviously buying their own stock because they believe it to be cheap and they believe the business will get better. Whether that is true or not, who knows. But the reason we look at insider trading is just exactly for these kinds of insights. I have plotted insider sells against the PM40 going back about two years. Click here to view this chart. You will see that sells generally occur when the PM40 is high and tend to decrease when the PM40 is low. Buys are just the opposite.

Thanks for your question,


Dear PM:

While you often focus on the North American industry, it thought that the following would perhaps be of interest to some readers, if only to let them know that life is tougher for some overseas competitors, at least when trying to build a new mill.

In early July, Gunns Limited submitted for public comments a draft Integrated Impact Statement (IIS) describing the bleached kraft mill they propose to build, along with predicted environmental and socio-economic impacts.

The mill will produce over 3000 TPD bleached eucalyptus market kraft in a single production line. It will be very efficient, with low labor force, and will export energy made from burning its own black liquor and hog fuel, so will actually benefit somewhat from high oil prices. The effluent and atmospheric discharges will be well below EPA standards for new mills, but the total flows will still be large, due to the size of the mill.

The report covers 7500 pages, and cost AUD 11 Million (approximately USD 10 million). It can be downloaded from http://www.gunnspulpmill.com.au/iis/default.htm

The Gunns IIS report is considerably more complex and detailed than we are used to seeing for new projects in North America, and lays bare extensive process descriptions that many companies here would consider confidential business information. After a period of public debate, which promises to be heated, and review by government, Gunns will either have their plans approved, probably with some conditions, or will have to abandon the project. This process will take at least several months.

The whole experience makes me wonder about the extent and cost of such studies a company here will have to undertake when a new-mill project finally surfaces on this continent, as it must one day.


Neil McCubbin

Foster, Quebec, CANADA


Thanks, Neil, for sharing this information with our readers.



PaperMoney welcomes your questions and comments on any topic pertaining to the pulp and paper industry world wide. Use the feedback forms at the bottom of each article, or address your comments to AskPM@globalpapermoney.org.


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