I share insider information about how a part of Kremlin Propaganda™ reacted to the “gas betrayal [for Ukraine, in the sense that Naftogaz allegedly sold out Ukraine – ed]”, because of which chairs of all analytical telegram channels, media outlets, and many investors are burning.
For two days the best minds of a certain segment of “Kremlin propaganda” argued… They argued about whether Gazprom‘s shares should be bought immediately on Monday, or better on Tuesday-Wednesday. They read the text of the [Dmitry] Kozak memorandum, studied maps of the depths around Denmark, consulted catalogs of technical characteristics of pipe-laying ships, found out prices at Chinese shipyards, and reached out to specialist sources. The collectively decided to eventually buy equal portions. So excuse me for being absent from the airwaves, “Kremlin propaganda” has been occupied with its own skin, well or by what Taleb calls “skin in the game”.
Disclaimer: This is not an investment recommendation. The recommendations are from banks and brokers. All that is above and below is my thoughts aloud. You are solely responsible for your investment decisions.
Those who read me long ago can remember that personally I had a similar position on Gazprom and Polyus at the peak of last sanctions hysteria. I want to thank almost all the Russian media and expert community for the hysteria created back then. I very much hope that this time they will not fail.
I am not sure that this needs to be clarified, but just in case I will speak in plain text:
0. The main stake in the game (and the main risk in Gazprom shares) was not “will we finally freeze the Ukrainians or not”, but “will the US still have physical control over a practically uncontested gas supply route to the European Union or not.”
Since “Nord Stream-2” will be completed (the question is in price and timing, but even Platts does not see any killer restrictions) – then the US will no longer have physical control over the uncontested route – it removes the main geopolitical risk from the stock. The main egg from which a black swan could hatch for Gazprom is not yet broken, but the probability of it becoming an omelet is much greater than all other options.
1. The indicators of transit volume from the “Kozak Protocol” are just a reflection of the reality in which there is “Nord Stream-2”, and the transit of Ukraine in comparison with what it desires and the level of 2018-2019 falls first by 25%, then by 50%, with, to put it mildly, unclear prospects after 5 years. The price of transit at the level of European transport operators, inscribed in the protocol, is very good.
2. Passing the peak of Gazprom’s investment cycle means there will be more money in the future. The main shareholder has motivation to pay dividends (see budget, transit of power, search for money for national projects, etc.). There is a new dividend policy.
3. $3 billion because of Stockholm is expensive, but such is the price for the foolishness of 2009. I want to believe that the lesson will prove painful enough to continue choosing more reasonable venues for arbitration. Even in the short term, compared to the company’s revenues, this is not a fundamental loss.
4. The most serious risk for Gazprom is a liquified natural gas glut (overproduction of liquified natural gas in the world), but it’s not about Ukraine at all. I come from the fact that liquified natural gas glut is a temporary phenomenon, especially if you look not a few quarters ahead, but a little further. I have been trading exchange goods and shares of “commodity companies” (from copper and corn, to petroleum products) for a very long time (15 years) and the fundamental rule “the cure for low prices is low prices”, which perfectly describes the scheme of the economic and investment cycle, is hammered into me in the most iron way. “Kremlin Propaganda”, not only coming from me, has a great advantage over investment funds: the investment horizon is many years, and sensitivity to the company/portfolio results for the next month/quarter is zero.
PS: By the way, I sincerely do not understand masochism: in the Russian investment community there are a lot of people who live on the principle of “It’s the end of crappy Russia”, but at the same time it turns out that they have Gazprom and Rosneft in their portfolios. I do not understand. Suitcase-Offshore-NYSE! [mocking the slogan “Suitcase, train station, Moscow” uttered by Banderist Ukrainians to “separatists” – ed] The portfolio must conform to beliefs.
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