Shorts steer clear of salmon stocks

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Despite the combination of record-high stock prices and a sharp fall in salmon spot prices, few are aiming for further decline.

Led by market leader Mowi, several of the leading salmon shares have noted new price peaks during the summer holidays. At the same time, salmon prices have fallen heavily.

From mid-June until this week, the spot price for salmon has gone down by about EUR 2 per kilo.

Wait for fall
This would normally bring out interest on the part of investors who are waiting on a downturn, or a short.

Short selling is a strategy where an investor occupies a position in an asset, such as a stock, with the intention of profiting from a fall in prices. A successful such strategy involves borrowing the asset and selling away immediately at the current price, and then repurchasing it later at a lower price, assuming the price has dropped.

Only one stock
However, according to the Financial Supervisory Authority’s short sale register, the only active short positions are registered in one of the fish farming companies on the Oslo Stock Exchange, namely Mowi. With Mowi, 5.8 million shares were sold short, corresponding to 1.1 per cent of the company’s total number of shares outstanding.

In comparison, short favourites Subsea 7 and Norwegian Air Shuttle registered 9.1 and 6.8 per cent of their shares respectively as short-sold.

Low or no short-shares will normally indicate that investors do not expect a significant fall in the price of the underlying stock.

Graph: Infront