Issued by Fearnley Securities AS on 17 October 2016


1. Introduction

This document provides additional disclosures and disclaimers relevant to research reports and other investment recommendations (“Recommendations”) issued by Fearnley Securities AS, wholly owned by Astrup Fearnley AS, (“Fearnley”), cf. the Securities Trading Act Section 2-10 with further regulations.


Fearnley complies with the standards for recommendations issued by The Norwegian Securities Dealers Association and the Norwegian Society of Financial Analysts. Fearnley is licensed by and under the supervision of the Financial Supervisory Authority of Norway.


Matters relating to Recommendations shall be governed by the laws of Norway and be subject to the exclusive jurisdiction of Norwegian courts.


This document is - by reference in the Recommendation – deemed to be acknowledged and accepted by any person receiving the Recommendation.


2.  Equity Recommendations


Basis and methods for assessment 
Recommendation for shares and share related instruments (“Equities”) are based on price targets fixed with different valuation methods that may include analysis of earnings multiples (absolute and relative), valuation of a company using DCF calculations (discounted cash flow) and by carrying out net asset value (NAV) assessments. Price targets are changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of the issuer’s assets changes or when factors impacting the required rate of return change. Unless otherwise stated, our recommendations have a 12 month horizon.

Definitions of key terms:

Buy: When price target is more than 15 % above market price.
Accumulate: When target price is within 5-15 % above market price.
Reduce: When target price is +5 % to -15 % below market price.
Sell: When target price is 15 % or more below market price.

There is an element of risk attached to all investments in financial instruments. There may be uncertainties with respect to the accurateness and reliability of any information, interpretation and assessment. There are uncertainties and risks attached to the correctness of any Recommendation by Fearnley and with respect to forward looking statements and expectations. 

High risk: beta above 1.2
Medium risk: beta range 1.0 – 1.2
Low risk: beta at or less than 1.0

Fearnley assess the risk in the recommendation in relation to Oslo BørsBenchmark index (OSEBX). Fearnley apply the beta as main risk assessment criterion to our recommendations. The risk assessment is in addition based on a consideration of the individual companies business and financial risk profile.

Note that Fearnley’s equity coverage encompasses solely companies within the following sectors: Shipping, Oil services, Seafood and Oil E&P. These sectors are cyclical by nature and will over time presumably have a higher volatility than the overall market. The reason for choosing Oslo stock exchange as a benchmark in our risk assessment is that Oslo stock exchange has a high content of these sectors.

3.  Fixed Income Recommendations 

Basis and methods for assessment

Our recommendations for bonds and other fixed income instruments are based on assessment of credit risk (the creditworthiness of a particular issuer or instrument as of a given date) relative to risk premium (risk premium inherent in yield relative to investment amount).

Fearnley mainly analyses fixed income instrument in the high yield segment where the credit risk is regarded as high. This includes rated instruments with ratings below BBB (S&P) or Baa3 (Moody’s) (below “investment grade”) where Fearnley will quote the ratings to the extent these are known to Fearnley.

Definitions of key terms:

Buy: The risk premium is considered as favourable relative to credit risk

Hold: The risk premium is considered as acceptable relative to credit risk (Prior to April 11 2016 defined as Accumulate)

Sell: The risk premium is considered as not acceptable relative to risk (Prior to April 11 2016 defined as Reduce)

Unless otherwise stated, our fixed income recommendations are valid until maturity of the bonds.

4.  General disclosures (Equity and Fixed Income Recommendations)

No agreement with issuers concerning Recommendations
Fearnley has no agreements with issuers with respect to dissemination of Recommendations. Generally Fearnley will however present the Recommendation for the issuer prior to dissemination to assure a correct factual basis.
Organization and duty of confidentiality
All employees of Fearnley are subject to duty of confidentiality towards clients and with respect to handling inside information. Fearnley has established “Chinese walls” and other organizational procedures for the purpose of minimizing conflicts of interest within Fearnley and in the Fearnley group and between clients.
Compensation schemes for analysts
No part of analysts’ salaries or compensations relates directly to investment banking services or other services provided by Fearnley or consolidated companies to issuers. All analysts in Fearnley are however part of the general bonus scheme related to the total earnings of Fearnley.
Updating of Recommendations
Fearnley has no fixed schedule for updating unless stated or implied in the Recommendation. 

Disclosure of positions in financial instruments 
Please see the following address for an overview of positions in financial instruments held by Fearnley and related companies and persons. Click here to view disclosure of positions

Disclosure of assignments and mandates etc.
Please see the following address for an overview of (a) all financial instruments in which Fearnley or related companies are market makers or liquidity providers, (b) all financial instruments where Fearnley or related companies have been lead managers or co-lead managers over the previous 12 months and (c) all issuers of financial instruments to whom Fearnley or related companies have rendered investment banking services over the previous 12 months. Please be aware that agreements and services that are still subject to confidentiality are excluded. Click here to view disclosure of assignments and mandates etc.

Previous recommendations
Please contact us at fondsweb@fearnleys.no to receive an overview of Fearnley’s Recommendations in the financial instruments of the issuing company the last 12 months, including data on changes in Recommendations. Please be aware that certain informal Recommendations may be excluded.
Please see the following page were you will find quarterly statistics on the overall ratio of “Buy”, “Accumulate”, “Hold”, “Reduce” and “Sell” in Fearnley’s Recommendations in financial instruments, including a split with respect to issuers where Fearnley provides investment banking services the previous 12 months. Click here to view our statistics


General Disclaimer of liability

All Recommendations are distributed by Fearnley as a free informational service to its clients, and is not meant to constitute any form of investment advice as defined in the Norwegian Securities Trading Act Section 2-4 (1).


Recommendations should not be construed as an offer or solicitation to buy or sell investment products or services.


Opinions expressed in the Recommendations may be subject to change without notice and should be independently confirmed prior to making any investment decision.


Fearnley and the analyst accept no responsibility and expressively disclaim any and all liabilities for any and all losses related to investments caused by or motivated by Recommendations from Fearnley. Any person receiving a Recommendation from Fearnley is deemed to have accepted this disclaimer. The disclaimer shall apply even if a Recommendation is shown to be erroneous or incomplete or based upon incorrect or incomplete facts, interpretations or assessments or assumptions by Fearnley, and irrespective of whether Fearnley or any person related to Fearnley can be blamed for the incident.


The information in the Recommendations  has unless otherwise stated been obtained from public sources believed to be reliable but Fearnley do not represent that such information is accurate or complete and it should not be relied upon as such. Fearnley, its employees, directors or officers may not be held liable for any errors or inaccuracies or incompleteness in the analysis or for the fitness of the information for any purposes and hereby expressly disclaim all liability for any loss, direct or indirect or any other kind of damage resulting from any reliance upon or use of Recommendations and the information contained therein.



Recommendations are confidential, and may not be reproduced, in whole or in part, without the prior written consent of Fearnley. Recommendations are intended for professional investors only and may not be passed on to any legal or physical person and/or institutions without the prior written consent of Fearnley.


5. Special disclaimer for U.S. persons (Equities and Fixed Income)

Fearnley Securities AS securities research and general presentations are provided by Fearnley Securities, Inc. to major US institutional investors for information purposes only. Fearnley Securities AS is registered in the Norwegian registry of business enterprises under registration no. 945 757 647. Fearnley Securities AS is licensed and supervised by The Financial Supervisory Authority of Norway (“FSA”).

The material should not be used or considered an offer to sell or a solicitation of an offer to buy any financial instruments or should be relied upon in connection with any contract or commitment whatsoever. Any opinions expressed reflect Fearnley Securities AS judgment at the time the information was prepared and are subject to change without prior notice. Fearnley Securities AS securities research and presentations is based on information obtained from public sources that Fearnley Securities AS believes to be reliable but which Fearnley Securities AS has not independently verified, hence Fearnley Securities AS makes no representation or warranty expressed or implied as to its accuracy or completeness. The products discussed in securities research and general presentations are not FDIC insured, may lose value and are not guaranteed by Fearnley Securities AS. Investing in non-U.S. securities may entail certain risks. The securities of non-U.S. issuers may not be registered with or subject to SEC reporting and other requirements. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Fluctuations in the values of national currencies, as well as the potential for governmental restrictions on currency movements, can significantly erode principal and investment returns. Market rules, conventions and practices may differ from U.S. markets, adding to transaction costs or causing delays in the purchase or sale of securities. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies.

Neither Fearnley Securities AS, its partners and employees, nor any other person connected with its research and presentations, accept any liability whatsoever for any direct or consequential loss of any kind arising out of the use or reliance on the information given. They do not take into account the specific investment objectives and financial situation of any recipient. The securities research and general presentations do not provide individually tailored investment advice or offer tax, regulatory, accounting or legal advice. Prior to entering into any proposed transaction, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transaction. Financial statements included in the report, if any, may have been prepared in accordance with non-U.S. accounting standards that may not be comparable to the financial statements of U.S. companies. Investors seeking to buy or sell any financial instruments discussed or recommended in the research or in separate presentations, should seek independent financial advice relating thereto. Fearnley Securities AS research and materials from separate presentations may not be distributed, quoted from or reproduced for any purpose without written approval by Fearnley Securities AS.

Disclosure of Interest

Fearnley Securities AS is constantly seeking investment-banking mandates, and may at any time perform investment banking or other services or solicit investment banking or other mandates from companies covered in its analysis and presentations. Fearnley Securities AS may from time to time as part of its investment service hold positions in securities covered in its research and presentations. In order to avoid any conflict of interests Fearnley Securities AS and its employees will adhere to internal regulations, recommendations from the Norwegian Securities Dealers Association and relevant legislation and regulations from the Financial Supervisory Authority of Norway. Internal holdings will be specified as part of Disclosure of Position.

Distribution in the United States

Research reports are prepared by Fearnley Securities AS for information purposes only. Fearnley Securities AS and its employees are not subject to the Rules of the Financial Industry Regulatory Authority (FINRA) governing research analyst conflicts. The research reports are intended for distribution in the United States solely to major U.S. institutional investors as defined in Rule 15a-6(a)(2) under the United States Securities Exchange Act of 1934, as amended and may not be furnished to any other person in the United States. Each major U.S. institutional investor that receives a copy of a Fearnley Securities AS research report by its acceptance thereof represents and agrees that it shall not distribute or provide copies to any other person. Fearnley Securities, Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Any major U.S. institutional investor receiving these reports that desires to effect transactions in any securities discussed within the report should call or write Fearnley Securities, Inc. Fearnley Securities, Inc. is located at 880 Third Avenue, 16th Floor, New York, NY 10022 and may be contacted at +1(212)277-3600.