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Strategies & Market Trends : Value Investing

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To: FIFO_kid2 who wrote (49435)	9/15/2012 11:29:47 AM
From: E_K_S	1 Recommendation Read Replies (1) of 78495

Hi FIFO_kid2 - Re:Omega Protein Corp. (NYSE: OME) Marine Harvest ASA (Other OTC: MNHVF) I really do not know any of the specifics regarding OME contracts, but that price arrangement will eventually end. I am bullish on all commodities especially food and OME as you state produces a lot of fish meal which is used extensively in growing farm raised salmon. OME also owns an efficient production facility for producing fish oil. This is a high margin business and not impacted too much by the price of the inputs. As they develop their distribution channels, I see this division providing a steady consistent cash flow to their operation. You will notice that their per share cash flow increased substantially after their acquisition of Cyvex Nutrition in December 2010. This division and other JV partners help process and distribute their fish oil tablets I have owned the company for just over a year with my first buy 8/2011. Both the Graham Number and EKS$ reflect a greater than 50% discount to their calculated value; GN= $14.23/share and EKS$=$14.00/share as the current EPS analyst estimates are a bit lower than the previous years EPS (only 2 cents lower $.93/share for 2011vs $0.91/share for 2012). Their BV has increased every year over the last five years. Their LT Debt has come down over the last 5 years even though they have increased their capital investments acquiring Cyvex Nutrition in December 2010. FWIW, I am also upping my position in Marine Harvest ASA (MNHVF) as I feel their long term production will be higher as they bring their new fingerlings into production (usually a 30 month cycle to harvest). Here fish meal is an important input to the production of healthy and quality fish. I may have missed the bottom as the stock is already up 100% from the low in 12/2011. Once the new production is available for sale and distribution, I expect salmon prices to be higher (remember pork & chicken prices will be much higher due to the poor corn harvest) and the stock could run back to $1.20/share (that's a 50% gain from current levels...last $0.83/share). The premise for my investment in fish, fish meal and fish oil is that chicken, pork and beef will all be much higher in price due to the poor corn harvest in the U.S. and Canada. Overall demand should be greater for fish (a substitute for the other animal proteins) absorbing the previous over supply of farmed raised salmon that has held prices down in 2010 and 2011. EKS

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