Forget Norwegian, How About Asian Fisheries

In watching yet more college lacrosse on Monday I stumbled across a brief article titled Top 10 Most Profitable Food Stocks two of which where Chinese fisheries; China Marine Food Group (CMFO) and HQ Sustainable Maritime Industries (HQS). Over the last couple of years I have written several posts about Norwegian fisheries as a tie in to improved diets in certain countries that will involve more protein.

These posts are best thought of as exploring the concept to see whether there is a way to invest. I think there is a way but I have not figured out how as of yet. GlobalX has filed for a Global Fishing ETF that might be a good way in but for all the times I've written about this subject I may need to be a couple of shares personally no matter what is in it (humor attempt).

As you might imagine many of the stocks in this space are tiny companies that are difficult to follow. The two above are microcaps and to be clear I am not a buyer or holder of either one. It seems like every few weeks Barron's runs a little profile on small cap Chinese stocks that are the result of reverse mergers with some shady story tied to them. If you are going to troll in these waters, ahem, then you really need to research beyond any numbers you might find on a company website.

There are fishery stocks from several other Asian countries including Thailand and Japan. Many of the stocks in this segment are also very difficult to trade in addition to getting information on, a couple of the Norwegian ones are actually easier to follow. So maybe the ETF will be a way in for anyone buying into the more protein theme and wanting to use the theme as part of their foreign equity exposure.

Of course if the composition stinks, my humor above notwithstanding, it will be an avoid. One way it could stink would be that it allows for owning mega cap stocks with related subsidiaries that while relatively large in the industry represent a small fraction of the parent's revenue and earnings. For example if Unilever (UN) and Nestle (NSRGY) are the largest two components because they sell tuna fish (I don't know if they do it is just an example) then chances are the ability to really capture the theme would be severely muted.

From a bigger picture viewpoint for people interested in narrow based portfolios and to the extent that portfolio construction evolves, things like fisheries in foreign countries become a way to potentially add value versus buying a staples ETF that is dominated by UN and NSRGY. Similarly tollroad exposure could be a way to add value versus a utility ETF that is heavy in Duke Power and E.On.