Two Themes Near and Dear

Well it is finally here (scheduled for tomorrow actually); the Norwegian Fishery ETF! Long time readers will know I have been writing about this theme for several years. The long term global demand for fish seems to be a one way trade which creates a long term tailwind for the stocks. To be clear the stocks will still face the ups and downs of the stock market cycle but more people globally are going to be able to afford better diets.

It is not really the Norwegian Fishery ETF, the proper name is the Global X Fishing Industry ETF (FISN) and Norway is the largest country weight at 35%. Another prominent country is Chile at 13% (think Chilean sea bass). I think this will prove out as very important theme over the next ten years along the lines of water although my hunch is that FISN will be a little more volatile than PHO which we have owned across the board since a couple of days after that fund came out in 2005. The stocks in the fund are not easily traded in the US. Marine Harvest (MNHVF) from Norway is one the largest names in the fund, it trades around $1.30 these days with average volume of 200,000. I've owned Marine Harvest personally for a few months and have been quite lucky with it but the volume is not enough for me to put clients in it.

By the way if you research the name you will find what looks like an ADR for Marine Harvest with ticker MNHVY but it doesn't actually trade. As an amusing side note I spoke to Global X about this fund during the development process (no money changed hands if that needs saying) and they have been kind enough to leave me with the impression I contributed to the ultimate make up of the fund. I will keep you posted if I do anything for clients here.

The other theme is toll roads. Someone else wrote about them besides me. I found this article by Clemens Scholl that gave an introduction to the space and then brief overviews to many companies covering eight countries.

The yields are generally quite high making them very much like utility stocks (a point I've made before) but the respective volatilities is quite diverse. The Australian and European stocks in the space seem to be more volatile than the Chinese names. I have thought the toll roads a great way into China for quite a while but the trading is very thin and again not ideal for clients. The story though is about growth in the number of people who buy cars and the various services that the toll road companies provide on their highways.

My focus for China has been to capture parts of the market where Chinese people are improving their way of life which means looking in areas like materials, energy, utilities, industrials and maybe consumer stocks while avoiding financials, real estate, anything to do with exports and, although not sector specific, reverse mergers.

For now there is no toll road ETF, there may not be enough companies to accommodate a fund but I think a fund that combined toll roads, airports and sea ports could function as there are, in my opinion, similarities in terms of fundamentals (capturing economic activity on the ground) and volatility characteristics (some names in these spaces are very volatile though).

Scholl has another interesting article worth reading about the portfolio of one of the wealthiest people in Norway, the portfolio is Norway-centric.