Tuesday, 27 September 2016

Boom Bust Industry - Aggressive Takeovers, Billions of Dollars - Fish Farms, Updated Sept 29

I have consistently pointed out that one of the biggest problems with fish farms - Marine Harvest, Cermaq, Grieg Seafood, and so on - is that it is boom bust industry where workers are hired or fired based on market forces. There is no even keel for this industry, or workers - mostly workers.

See: http://www.marineharvest.com/globalassets/investors/handbook/2016-salmon-industry-handbook-final.pdf.

The top end people, like John Fredriksen who owns the company that owns Marine Harvest, not so much. He sold off more than $548 million in his MH shares (one third of his holdings) earlier this year to bet that MH shares would drop big time, and then could be bought back for less than he sold them for (his other industries in oil and shipping may need propping up this year, as well)

Kjersti Sandvik's new book, Under the Surface, points out that the profit margin is 23- to 25-%, a powerful big reason for entry into the industry. And companies like Cermaq, and Hydro actually started inside the Norwegian government, something that would not be allowed in Canada - as in fraudulent - and were sold out, Cermaq as recently as 2014 to Mitsubishi, the government still holding 34% of the share value.

This non-arms length nature is common in Norway. Business and government act together to put money in both's pockets.

There are many reasons for busts but mostly it is around losing crops of fish to disease, sewage, algal blooms, lice and so on. If you go to the index for this site (in Jan 2016), you will find the reference for the Kibenge Powerpoint presentation that points out the aquaculture industry loses 33- to 49-% of their fish/crop to disease. As in bust. These problems can be solved by putting fish farms on land. No one needs to get fired.

You will see that the boom bust nature is amply demonstrated in the Marine Harvest Handbook 2016, by one of the the appendices, on mergers, buyouts and takeovers:

But its doesn't end with this jaw-dropping list. The list goes on, as in BOOM BUST. And you will notice the Hydro company that had a long history in the Norwegian government:

While you are lifting your jaw off the floor, consider this list of Martine Harvest's various formulations over the years. At one point it was a shelf company that no one wanted. Fredriksen, a guy who operates in 'cyclical' industries picked it up as part of a deal for bigger company, and produced more than $15-billion in profits for shareholders over a decade, as in boom.

These images speak for themselves. I need not say another word.


But you might watch this video:  https://www.facebook.com/alexandra.morton.1671/posts/1882311535330732.

No comments:

Post a Comment