Broker Idea: Norwegian Salmon Tax Trade

Norway introduced Salmon Tax, that would affect the whole Norwegian Salmon industry at the end of September. Share prices went down by 30-40%. The opposition attacked the measure. Minister of Finance is meeting the largest Salmon producers this Friday. The tax consultations are due to be completed by 4th January. Tax compromise is very likely.

Summary of my call with analyst from a leading Norwegian broker

  • At the end of September, the Norweigan government announced the Salmon tax. As a result, salmon producers went down by 30-40%.
  • The opposition attacked the measure, as it would make Norweigan Salmon less competitive and reduce employment in the sector.
  • The government invited the opposition to talks on the measure so that the measure would be agreed upon by broad agreement.
  • The Salmon Tax Consultation process will last until 4th January. By that time, a compromise should be expected.
  • There is a meeting on Friday with the largest farming companies and the minister of finance
  • Some issues could be resolved relatively soon – we could see lighter taxation
  • At the moment, the tax is 8 NOK per kg, which could be reduced to 4-5 NOK
  • The government publicly declared they want to raise 4 bln NOK by the tax; the current measures would generate 10 bln NOK
  • They should reduce the tax so that it would generate 4 bln NOK
  • Calculation of the tax is also attracting criticism – the tax is to be calculated based on weekly prices – not on realized prices – which creates  a lot of issues – this could be resolved in consultations
  • Tax will hit the largest companies, the smaller companies have less taxes
  • We could see 20% impact on the share price from a reduced tax
  • The most exposed is Salmar – wast majority of volumes are in Norway – Salmar would gain the most. It is most down. It is the top pick of the brokerage house. The analyst also likes the acquisition they announced recently. The disadvantage is a higher leverage that was taken to finance the acquisition.
  • Mowi – is less exposed due to the high proportion of forming outside Norway. Mowi has a stronger balance sheet.

Our family office bought into the trade. 2/3 of the position is Salmar, 1/3 of the position is Mowi. Our target upside is 20%. Investment horizont is 4-6 weeks.


The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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