LON:FXPO | Ferrexpo Ukraine And Russia - Thoughts?

14th Jan '22 by dfs12

20 comments 2676 reads

As a holder of Ferrexpo (LON:FXPO) I can't help but notice that the stock price today is under pressure. (Around 6% down at time of post).

It is likely that this is a reaction to increasing tensions between Russia, Ukraine and Nato. Russia has amassed 100,000 troops on the border apparently.

As a reasonably conservative investor I am beginning to feel nervous. I have trimmed my position this morning but am concerned that I may be bailing out at a time when the opposite might be a better thing to do (I have an incredible knack of selling a the bottom of a trough!)

Thoughts from more knowledgeable investors welcome...

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About the Author

Dfs12

Premium Member

Interested in empirically proven factors that increase the probability of choosing winning stocks.

20 comments

bryans1311

14th Jan '22

It’s difficult to judge what the actions of Putin will be. Personally I think he will keep up the posturing until at least after the next election which isn’t until 2024. Also, I don’t think NATO/US will want to do anything to rattle him, as he is so unpredictable. All it could take is one tiny spark to ignite the whole thing though!

Chance of invasion…? I’d put below 50%. Worst possible outcome in case of invasion - 100% loss. Best case outcome, given the value metrics and quality and income metrics- greater than 2x, maybe 3/4x in a short period of time? Seems like a good asymmetric bet for a small part of a portfolio to me!

Snowbum

14th Jan '22

I hold and I’m happy to continue to do so, price level support at 270p is worth watching though.

Whitbourne

14th Jan '22

Coincidentally I was hovering over the 'buy' button following the fall... the trouble is, the risk of invasion is one that cannot be researched. You have to make a subjective judgement.

I agree with bryans1311 that from here, the risk/reward is quite favourable. I definitely agree that the risk of an actual invasion is below 50%. The more likely scenario feels like an uprising in eastern Ukraine with more-or-less covert Russian support, which might hit sentiment still further but won't impact Ferrexpo's operations. That's why I decided not to buy just now. It could just stay messy and confused for months, with the SP drifting down.

If your existing position is not too large as a % of your PF it would be rational to look past the current situation and wait for the value to be realised. If it's really significant then trimming the position feels like the right thing to do and you may want to reduce further. Of course you must do what you think it right, this is a subjective view from someone that doesn't know you and your circumstances.

bullhead

14th Jan '22

hi Dfs12i found myself in a very similar position when it came to Central Asia Metals (LON:CAML) and the disruption in Kazakhstan the other week and it depends really on how much of a % your holding makes up of your total portfolio how long your time Horizon for holding the stock is and if the worry of holding it is keeping you up at night

When it came to my holding in Central Asia Metals (LON:CAML) I sold and transferred my money into Atalaya Mining (LON:ATYM) because I had no idea what the long term outcome of the unrest in Kazakhstan would be

While I think it unlikely there will be a full scale war between Russia and Ukraine it could descend into another regional civil war in eastern Ukraine

In my opinion this could drag on for months as Russia and USA/Eu are using the problems in Ukraine as a bargaining chip for a bigger dispute on relations between the west and Russia/China

Sorry I could not be more help

I actually do see myself owning Ferrexpo (LON:FXPO) in the future when this settles down

judywil

14th Jan '22

Thanks so much for posting this today. Very helpful and much appreciated. I hold and came looking for what was going on!

dfs12

14th Jan '22

Many thanks for all the excellent contributions.

The holding is 2% of portfolio, so not huge. As a result I'll probably try to sit it out (not always easy but I'll try to stop looking). I think getting out first thing (much like a profit warning) would have been a good move but I missed that boat. A bounce back is possible if things settle down a bit (which is probably most likely)

Thanks again to all.

Silver Moon

15th Jan '22

Success for Putin in Ukraine for Putin would probably mean the rapid assimilation of Georgia, Azerbaijan , and Kazakhstan into the New Russian Empire as well. I will be kissing goodbye to the Polymetal International (LON:POLY), Central Asia Metals (LON:CAML), Anglo Asian Mining (LON:AAZ), and Centamin (LON:CEY) which I hold, as we brace ourselves against an Iron Curtain.

dfs12

24th Jan '22

This is warming up. Families of US diplomats advised to leave the country due to risk of imminent Russian invasion.

I have now fully sold out - at a probable low :(

Good luck to other holder and Ukraine citizens.

Guybrush

24th Jan '22

I bought some last week on a bounce but it didnt follow through so I sold at quickly. In fact, I've closed all my positions this morning. Once the threat of an invasion subsides and it will soon enough, that is the time I'll be buying. That should coincide with strong upward move on the charts here at the same time. I'll wil be taking a small position on the next "bottom" and scaling up if there is follow through. If that bottom breaks I'll sell again, and wait for the next. With the right timing, this could be a massive multibagger. Have to be patient though, jumping in too early and it could all be for nothing.

Guybrush

24th Jan '22

A good read...don't forget to use the translate button(Chrome) unless you can read Russian of course.

https://www.forbes.ru/finansy/...

peachy47

25th Jan '22

I am also a holder and am watching Russian activities with concern. Like any share this is either a problem to fix or a chance to accumulate, depending on your risk position. l cant guess Putins next move, he is too unpredictable. In the meantime I have decided to stay put. Silly I know but its a good business - if only.

Patrickmylnetrade

25th Jan '22

Hi Guy , interesting take on Russia and its behaviour. I always think sanctions are fairly teethless, especially to a large mostly self sufficient country.

What is interesting here thou, is I suspect investors will stay clear until the "risk" or dialogue changes. Even if we both know war is unlikely, .. stock pickers won't be piling back in until that's the public opinion/dialogue.

in fact I think the price has lower to go.....

epo001

25th Jan '22

Personally I'd be watching what China is doing while all this is going on, this is too good an opportunity for them. As for Putin, all that Boris and Joe have to do is threaten to impound all oligarch-owned Russian funds and assets in their respective countries unless Russia withdraws. The Russian army would be back home for teatime.

George Saunders

12th Feb '22

MHA MacIntyre Hudson are their auditors- I'd never heard of them before looking at the annual reports, apparently they are about the 12th largest in the UK and have 1 other FTSE250 client, always odd when a sizable business engages a provincial auditor....

The auditor's report makes for interesting reading- "In accordance with ISA 240 (UK) management override is presumed to be a significant risk. The ability to override controls puts management in a unique position to perpetrate or conceal the effects of fraud. This may take a number of forms such as falsifying accounting entries in order to conceal misappropriation of assets or other manipulation of accounting entries intended to result in the production of financial statements which give a misleading view of the entity’s financial position or performance."

Zoiberg

6th Mar '22

I see that FXPO is now flagging up on 20 long screens. Isn't it time automated systems learned to read the news?

snewton

21st Mar '22

As we now know Boris and Joe did that but it didn't happen. This is what happens when a madman is in charge of a superpower.

snewton

21st Mar '22

I don't think Russia will be able to occupy and/or run Ukraine. The risk now for FXPO is whether the spoiled brat will destroy it in the same way that he is destroying everything else that he cannot take through military force.

If forced to guess numbers at FXPO's chances I would say 66% chance of making a full recovery over time, and 33% of disaster/total loss. Given that the SP is now about 33% of where it was a year ago I would say it's quite a good punt.

FreakNomad

22nd Mar '22

From the Stock info page, Ferrexpo (LON:FXPO):

operates approximately two mines and a processing plant near Kremenchug in Ukraine, and an interest in a port in Odessa, and sales. It operates a fleet of vessels operating on the Rhine and Danube waterways, and an ocean going vessel, which provides top off services, and operates on international sea routes

Kremechug is on the Dniepr and is near Poltava and Kryguj Rih, and Dnipro where there has been a lot of fighting.

Odessa is closed, so the port is useless. Presumably the fleet of boats on the Rhine and Danube take product up from the Romanian coast to central Europe and then through Germany. With Odessa closed, even if the mines and operating normally, product is going to have a hard time getting out.

On 25th Feb. the company announced Force Majeure, because of an export suspension. The company can stockpile its iron pellets.

I think this is probably a good business and when the war calms down it might come roaring back. At the moment things could go any way.

Harry Hindsight

30th Mar '22

You want autobots to run market sentiment. They do that already hence volatility in popular stocks. My view is Stocko gives me an edge in having a quick analysis when some RNS pops up at 7am - are they feast or famine with your own view of the current market not a computers.

Just saying currently holding onto Ferrexpo (LON:FXPO) because did not read the chart - got suckered. So goes in the "coffee can" i.e. write off and not losing sleep over anymore.

Harry Hindsight

30th Mar '22

Ferrexpo (LON:FXPO) - has always had a sniff about it. Messrs Zhevago and Lusovenko.

With any miner the comment form Mark Twain always needs to be in the back of the mind - British Russian or anybody.

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Ferrexpo Ukraine and Russia - Thoughts?

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Dfs12

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