A Look at Marine Harvest's Share Price Drop: Strong Prospects, Potentially Undervalued

Marine Harvest ASA (OTCPK:MNHVF) (MNHVY.PK) shares have fallen significantly since the beginning of May.

Source: Fidelity Investments

MNHVF.PK peaked at a price of $1.34 on April 28, 2011 and since that time has fallen 24.6% to $1.01. There appear to be a few reasons for this in light of the company’s largely positive first quarter earnings report.

I have written several times in the past about how the returns of foreign stocks increase as the dollar decreases in value or weakens relative to the foreign currency in which the stock is denominated. This also works in reverse. When the dollar strengthens relative to a foreign currency, the foreign currency-denominated stock will deliver reduced returns to U.S. based investors. This accounts for part of the decline in share price.

Marine Harvest ASA is a Norwegian company that trades on the Oslo Bors exchange in Oslo, Norway. It trades under the symbol MHG on this exchange and the share price is denominated in Norwegian krone (NOK). The U.S. dollar has strengthened against the Norwegian krone over both the past 10 and past 30 day periods:

Source: The Titi Tudorancea Bulletin

This weakening of the Norwegian krone relative to the dollar was responsible for at least part of the fall in Marine Harvest’s share price over the past month. We can obtain more evidence for this fact by looking at the share price of Marine Harvest on its native Oslo Bors exchange.

Source: Marine Harvest Investor Relations

As is immediately visible, Marine Harvest fell on the Oslo Bors exchange as well as on the American Pink Sheets. The decline on the Oslo exchange was much less, however. MHG lost 12.22% over the past thirty days. The stock reached a high on April 28, 2011 of NOK 7.00. The total decline from that price to the May 13, 2011 closing price of NOK

This article was written by

Power Hedge profile picture
In-depth Research on underfollowed dividend stocks with 7%+ yields
Power Hedge is an independent stock research and analysis firm with a passion for macro- and microeconomic analysis. Power Hedge focuses our research primarily on dividend-paying, international companies of all sizes with sustainable competitive advantages. Power Hedge is neither a permabear nor a permabull. However, we believe that, given the current structural problems in the United States, the best investment opportunities may lie elsewhere in the world. The firm's strategy is primarily buy and hold, but will stray from that strategy on occasion. Our ideal holding period is forever, however we realize that both internal and external forces can impact an investment. For this reason, we believe that it is vital to keep a close eye on all of your investments. We do not believe in changing an investment based on short-term market swings.

Traditionally, we have not always responded to comments but in order to improve the quality of our research, comments will be reviewed and we will respond to issues regarding errors or omissions. This does not include our premium service, "Energy Profits In Dividends" which is available from the Seeking Alpha Marketplace. This service does include detailed discussions with our team both on the reports themselves and in a private forum.

Recommended For You

Comments (41)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.