Omega Protein (NYSE:OME) is an idiosyncratic business by every measure. While its business of catching small oily fish called menhaden (also known as mossbunker) and processing it into fishmeal and fish oil still somewhat depends on the economic cycle, the non-economic factors dominate its profitability. Note: I will use fishmeal from this point on to refer to both fishmeal and fish oil. First of all, the success of its business depends on the fish catch of its competitors, especially in Peru who are responsible for 1/3 of all fishmeal fish catch. It is also affected by buying patterns of Chinese livestock and fish farmers to which Omega sells 40% of its products and whose demand not only...
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