Sup yo!
So Russia:
What’s a TK to do? Can’t get out of my RSX positions and wondering if there are any other ways to stay involved…then it hits me:
VEON!!!
Remember a coupla weeks ago when I was like
“let’s get into a Russian position - these companies are super cheap and produce things the world desperately needs. If they make a commodity backed currency out of the ruble, these companies will do fine. Ready? Break!”
After entering to position limit I decided I might take a closer look at just what I’d gotten into. Lo and behold the largest holding of RSX (Russia ETF) was a telecommunications company called VEON1:
Never even fucking heard of it.
Here is some stuff I’ve learned:
Thirteenth largest mobile operator in the world
Worth a billion or so dollars (post the “Donbass Dustup”)
~~200 million subscribers
Biggest in Ukraine (Kyivstar) and Russia (Beeline)
Big ballers in Egypt/North Africa
Second or third in Turkey
Also loving Bangladesh and Algeria and Pakistan2
Fine and dandy right? This is where it gets a bit more interesting. Who owns VEON?
Say hello to the Letter1 fellas!
Links if you are interested: Semibankirschina, Mikhail Fridman, Alexey Kuzmichev, German Khan, Peter Aven.
Letter1 appears to be an investment holding company similar to Alfa Group, which is a Russian entity connected to Mr. Fridman. It seems to own a great deal of things in Russia - biggest private bank, biggest grocer, etc.
So VEON is 48% owned by Russian financial titans through Letter1, although their legal status as owners seems to have become…murky.
That leaves the Stichting at 8% ownership. A stichting is some kind of Dutch corporate structure that looks like a way to conceal ownership and remove liability. I’d bet that this is just Fridman.
There is also this:
EXOR IS THAT OLD MONEY
Y’all ever heard of the Agnelli fam?
Fiat (Chrysler too), Ferrari, Juventus, Industrial/Farm equipment, Insurance, Investments…they rich as fuck. Exor is their holding company.
Old money Italians investing in a company owned by a holding company started by new money Russians which sells cell phone service in emerging/frontier markets.
So: Got Patient Money?
Amsterdam, 14 March 2022 – VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a leading global provider of connectivity and internet services, announces that Fitch and S&P have downgraded the Company’s credit ratings to reflect new country ceilings for Ukraine and the Russian Federation. At the same time, due to the geographic diversification of VEON’s business across nine countries with a combined population of 680 million people, the Company’s credit ratings are more resilient than the sovereign ratings of Russia and Ukraine
The VEON CEO letter to shareholders march 15th claimed that they will be fine, have cash on hand outside Russia to handle whatevs, that those sanctioned guys aren’t going to be a problem. Sure - what could possibly go wrong?
The company does have cash flow. And these appear to be some of the most well connected men in Russian finance, running a massive international capital investment company staffed by loyalists3 - with incoming old money shareholders with a history of being patient4. Presumably they’ve done their research…
I need to think on this one a bit more. The options are not helpful5, but the thing is cheap6…maybe something for the TFSA?
Much love
TK
I wanted a way to play the Ruble - had to pony up too much in my account to buy it directly and wanted something to get in an out.
And a bunch of other places not on your fucking travel itinerary
Lotta names from the BP/TNK co-venture - heard of it? Headlines galore.
See: Fiat history pre Sergio Marchionne
I don’t love positions that I can’t trade options against. I’ll do it. But I don’t love it.
Here is one place I’m uncertain - stock price has been in decline for quite some time, so I’m not looking to purchase a shitty communications company that also has a war on its hands. I want a rock solid company that has been over discounted due to conflict risks.