Market Concerns Led to Clearwater Paper (CLW) Sell-Off Amid Weak Demand Outlook for SBS Paperboard

Fund Performance - Longleaf Partners Small-Cap Fund returned 2.03% in Q3 2025, underperforming the Russell 3000's 8.18% and the Russell 2000's 12.39% [1] Clearwater Paper Corporation Overview - Clearwater Paper Corporation (NYSE:CLW) is a bleached paperboard manufacturer with a market capitalization of $286.12 million, closing at $17.84 per share on December 01, 2025 [2] - The stock experienced a one-month return of -2.03% and a 52-week loss of 33.78% [2] Investment Insights on Clearwater Paper Corporation - Clearwater Paper was a detractor for the fund in Q3 2025 due to management's indication of weaker demand in the solid bleached sulfate (SBS) paperboard market amid economic uncertainty [3] - The SBS market is currently oversupplied and below mid-cycle levels, which poses challenges for the company [3] - Management is considering reallocating capacity to different substrates and has a history of effective capital allocation [3] - Factors such as competitor closures, tariffs on European imports, and recent foreign exchange movements could help balance the market [3] - Share repurchase remains an attractive option as the business trades at a low single-digit multiple of growing mid-cycle free cash flow [3] Hedge Fund Interest - Clearwater Paper Corporation is not among the 30 most popular stocks among hedge funds, with 20 hedge fund portfolios holding the stock at the end of Q3 2025, down from 23 in the previous quarter [4] - While Clearwater Paper has potential, certain AI stocks are viewed as offering greater upside potential with less downside risk [4]