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A fishy deal

May 26, 2023

The Norwegian government reached a deal yesterday with minority parties to secure a parliamentary majority for lowering to 25% (from the 35% initially planned ) a proposed tax on salmon farmers. This removes an uncertainty that has been hanging over salmon producers over the last months. Their stocks surged with our holding Leroy Seafood increasing 9%. From a valuation perspective, Leroy remains attractive in our proprietary quality value framework: a company that has a better quality than the average European company is a remarkable 1.25 standard deviations cheaper than the market ! In traditional multiples this corresponds to 11.6 times 12 months forward earnings and a dividend yield 2023e of 4.7% for a market leading salmon company.

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