Norwegian banks, Sparebank 1 SR (OSL:SRBANK) and DNB Bank ASA (OSL:DNB), declined on oil-related concerns, although neither institution holds more than 10% of loan books in direct oil- and gas-related businesses. We believe that the stock price drops are more magnified than warranted. Although Norway is an oil-producing country, it has a very different structure for oil proceeds. In most OPEC countries, oil is the only resource and money from oil revenues is spent on current government programs. In Norway, oil revenues collected by the government are sequestered in an oil fund, which is explicitly banned from use to bolster the domestic economy. In our opinion, the Norwegian economy is fairly insulated by declines in oil prices, but might be affected at the margins.
From Bernard Horn (Trades, Portfolio)’s Polaris Global Value Fund Q4 2014 Shareholder Letter.
