Description

I suggested this stock seven months ago. Since then, the fundamentals have
progressed more positively than I had expected -- and, importantly, yester-
day Zapata Corp., which owns 61% of the outstanding shares stated that it
was considering purchasing the 39% of Omega it did not alread own or, alt-
ernatively, seeking a sale or another "significant strategic transaction"
with its 61% interest.

We continue to believe that Omega is worth roughly $10 per share. Consid-
erations are: (1) the shares came public in 1998 at $16.00 and soon after
sold as high as $18.50; (2) the company earned $1.10 in 1998 -- and we
believe that this earnings level could be achieved again; (3) there
recently has been considerable favorable publicity about the health
benefits of Omega 3 fatty acids, an oil that is contained in the fish that
Omega harvests and processes; (4) after several years of poor earnings due
to abnormallly depressed prices for soybeans (Omega sells fish oils and
meals that are linked to the prices of soybean products), prices are
increasing -- and Omega earned $.11 per share in the March quarter; (5) on
March 31 the company had $13 million more cash than debt; and (6) the
tangible book value (thre is no goodwill)on March 31 was $5.44. It is
difficult to project Omega's 2002 earnings, but I guestimate that EPS could
be $.50 to $.75. If the present trends continue, 2003 EPS could be roughly
$1.00.

For much more detail about the company and its products, see the write up
dated November 19, 2001.

Catalyst

Zapata Corp, which owns 61% of Omega Protein, stated that it wishes to
acquire the 39% it does not already own or, alternatively, to sell its 61%
holding. Even if were not for this possible catalyst, the shares are very
attractive given the company's earnings power, strong balance sheet, high
book value, and growth potential if Omega 3 fatty acids become used for
their health benefits.