Jean Pierre Verster of Fairtree Capital presented his in-depth investment thesis on Salmar (Norway: SALM) at Best Ideas 2019.

Thesis summary:

Salmar is one of the largest and most efficient producers of farmed salmon, with an equity market quotation of $6+ billion. The company is integrated across the salmon value chain, from broodstock, roe and smolt production to value added product processing and sales. The salmon fishing industry has attractive structural supply/demand characteristics.

As a low-cost producer with scale, Salmar is well-positioned to continue generating EBITDA margins of 30+%, maintain net profit margins of 20+%, and to deliver sustainable ROE of 30+%. Salmar shares have doubled over the past year and are up 55% annually over the past five years, raising the question whether the recent price includes a margin of safety.

Jean Pierre believes Salmar shares could be worth 50% more within four years, with additional upside from new offshore fish farming initiatives. Salmar is an example of the principle that the most expensive mistake in investing may be selling too soon, or thinking it is too late to buy a great company compounding intrinsic value at an above-average rate.

Read Jean Pierre’s related article.

Listen to this session:

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About the instructor:

Jean Pierre Verster is a Portfolio Manager at Fairtree Capital in South Africa, where he manages the ‘Protea’ range of Equity Long/Short hedge funds. Mr. Verster joined the firm in 2016. Prior to this, he was an Analyst at 36ONE Asset Management for 6 years, as part of a team which managed the largest single hedge fund in the country. Previously, Mr. Verster had been a Portfolio Manager and Analyst at Melville Douglas Investment Management and fulfilled various roles at the Standard Bank Group, including as a credit research analyst in its Global Markets Research division, a financial manager in the insurance services division and an internal auditor in the retail banking division. Since 2015, Mr. Verster is also an Independent Non-Executive Director and Chairman of the Audit Committee of Capitec Bank, the second largest retail bank in South Africa by number of primary clients. He is a Chartered Accountant and holds the CFA and CAIA designations.