Member Info for Equanimity

Iron ore (62% Fe fines) is at 114 now, and it was at 92 in Nov/2021 when FXPO was priced around 300. No one knows where iron ore goes in the nearest future. It may recover due to the China reopening, or it may drop further on recession fears. The point is that FXPO is grossly underpriced relative to its cash flows and ore price. Due to the war, of course.

The war has not really disrupted FXPO operations. It sold 20% or so less pellets recently due to logistics difficulties, but we will probably see a healthy Q2 profit in a few days.

Will they cancel div? I do not see why. This is a company with lots of cash and zero debt. Cash flows continue uninterrupted. Iron ore prices are still high enough to warrant 300 valuations. Why not to pay?

Pokerchips. I am not saying people can be changed overnight. What I am saying is that EU candidacy will be good for Ukrainian stocks and make them more expensive (higher P/E mults). An effort in the right direction and adherence to the law is enough.

snudge1234, I am sorry, but I do not have time explaining why Ukraine will win this war. It would require discussing a lot of basics. Neither do I want to get entangled in pointless arguments with ideologically biased people here. I propose to simply wait until September, and see what happens. Even if Ukraine could not win, FXPO would be fine, as Russia has zero resources for moving into Poltava. It took Russians 80 days to advance 15 kilometres and take a tiny city of Severodonetsk, while Western weapons have not yet arrived, and HIMARS were not yet engaged in long-distance shootings of Russian military headquarters and warehouses.

As a small hint. In August 1943, German troops controlled a lot of territory. Yet, after the Battle of Kursk, it was clear the German Reich was finished. Simply because the Allies combined could deploy 2-3 times more resources.

One makes money when one has an edge. Understanding how this war is going to develop within the next few months provides a critical edge for making money in FXPO. Non-experts should get out and look for a domain where their expertise could be better applied.

Eradicating corruption is never easy. Usually leaders who attempt to do it, do not survive for a long time. That's why EU candidacy is so important - it will provide an extra motivation to the population. Becoming part of the European family is a dream of many Ukrainians. They associate it with freedom and economic prosperity. Besides, Zelensky will have a high approval rating after crashing Russia and winning the war. This will provide an extra credibility for doing the unpopular job.

Ukraine is granted candidate status to the EU membership. This will greatly help Zelensky in his anti-corruption fight after ending the war, and make Ukrainian companies more attractive for foreign investments.

Congratulations to the Ukrainian people!

https://www.bloomberg.com/news/articles/2022-06-23/ukraine-wins-symbolic-step-on-long-path-to-eu-membership

Professional people don't say "deluded", they say "biased", haha. And though it is difficult to stay unbiased in this conflict watching the humanitarian catastrophe, I hope I am unbiased at the level where my investments are concerned. I would be a bad investor if I could not compartmentalize.

It is true that sanctions on Russia are not super efficient short term. However, they are breaking whatever high-end technological sector Russia had, making it an economically ******ed third-world country for the decades to come. Also sanctions prevent Russia from buying microchips and spare parts for its weapons.

Sanctions could not destroy Russia short-term, but the delivery of heavy weapons to the Ukraine could. And there is a good movement in that direction. Yesterday in Brussels it was decided to give the Ukraine 18 HIMARS and M270, in addition to other weapons and artillery. This could spell serious trouble for Russians. Let's have this conversation again when the Ukrainians take Kherson back, for example. :)

I do not see Russia "having the upper hand" in this war. What I see is the Ukrainian army is not having enough artillery and heavy weapons to start the counter-offensive.

Today, the defence ministers of 50 countries ("Ramstein 3" group) are meeting in Brussels, where new weapons delivery schedule will be discussed and approved.
https://www.reuters.com/world/europe/ukraines-need-more-weapons-major-focus-defense-ministers-meet-2022-06-15/

On June 17, the European Commission is expected to recommend that Ukraine be granted candidate status to join the bloc with conditions linked to the rule of law and the fight against corruption. EU leaders will discuss Ukraine’s application to join the bloc during the next summit on June 23-24 in Brussels.

Once the war is finished (perhaps, in Sep-Dec/2022), Ukraine can find itself on a fast-track membership application, with a president who, by his overwhelming popularity after winning the war, has a mandate and is fully committed to the rule of law, fundamental rights and fight against corruption. This will likely bring P/E multiples assessment for everything investable in the Ukraine. I can easily see P/E mults expanding into 5-10 range in a couple of years, in line with the European developing countries counterparts. That would mean the price going to the multiples of what it is now.

Russians cannot blow up railway infrastructure. Rails are easy to fix. Each ballistic or cruise missile costs between 7-10 million dollars to produce. They are used only for "worthy" targets, like intelligence-confirmed train with Western weapons. This could cause short-term damage and blockage, but nothing serious for commercial logistics.

If the price is going to be above 300 in September, then who cares what the trajectory is.

Now it is official https://www.bloomberg.com/news/articles/2022-05-31/biden-says-us-will-provide-advanced-rocket-systems-to-ukraine

If the US ships to Ukraine 40-50 HIMARS, Russians will be kicked out of Kherson in a month. Conditioned on a few other weapon categories (already approved, like tanks) arriving in time.

This would be a gamechanger in this war: https://edition.cnn.com/2022/05/26/politics/us-long-range-rockets-ukraine-mlrs/index.html

Matthew125 If the war has finished, this stock would have P/E 3-5 and be in the 300-500 range. It is around 170 exactly because the worst, nearly improbable risks are "priced in". Ukraine disintegrates? Well, it was probable in Feb - beginning of March. Now, 3 months later, when the situation with modern weapons supply improves every day, it looks unlikely. I would rather expect Russia to disintegrate until the end of the year. Let's see, there is no rush.

Thanks snudge1234. Zelensky was a bit dramatic, but I cannot blame him - he is doing his job. More than 20 countries committed to supplying weapons to the Ukraine. The US lend-lease is approved. Yet, the process is very slow. It takes time to produce new modern weapons. And allies are understandably reluctant to send out their existing inventories, because it would weaken them. Zelensky is trying to save as many soldiers' lives as he could by urging his allies to act faster.

If one analyses the dynamics, it will become clear that Ukrainians will outgun Russians by the end of July, even with the delivery schedule unchanged. Ukrainians will have around one million soldiers armed with superior weapons by that time. Russians could mobilize more, of course, but they do not have weapons. They already started to use T-62 tanks and cluster bombs with 200-300m accuracy left untouched from the Soviet Union times. There is no way to ramp up weapons production in Russia, as they require foreign parts.

It does not mean Russians could not have short-term gains before July. They could even capture Severodonetsk and make some Ukrainian troops surrender there, as they did in Mariupol. This would not change anything strategically, though. Ukrainians will take the entire Donbass back by the end of September. All current Russian advances are politically (not military) motivated. And Russians do their push at the enormous cost, by destroying their best troops and making it easier for the Ukrainians in the future. Anyway, there is zero chance they will reach Poltava, IMHO.

Wars have a lot of surprises, so there will be lots of ups and downs. However, like in investing and economics, there are middle and long-term regularities that cannot be undone by short-term surprises and randomness.

Do not take my words for granted. Read analytics, listen to the war experts. :) DYOR.

OK, I see. :) Please kindly post that 20 to 1 link if you have it.

snudge1234, please do not hesitate to sell every share you have. And I am happy to discuss the matter again in 1-2 weeks. Until then, I am out of here. :)

Good luck all!

"continue in this way" - in what way? By how many kilometres did the Russians advance during the last week? What cities did they capture? Are they closer to capturing Donetsk or Lugansk regions than one week ago? What significant victories did they achieve? :)

Pokerchips, retiring on a health ground would be a nice face-saving scenario for Putin. However, personally, I don't think he will do that, unless he is forced to. The man is really paranoid at this point. With his KGB mentality, and having betrayed his friends many times in the past, he would be afraid to lose power and be at the mercy of a new leader. Poor old man...

Ukraine is pitching to attract foreign investments:

https://www.bloomberg.com/news/articles/2022-05-23/zelenskiy-issues-davos-demand-to-shun-russia-invest-in-ukraine

"Resources should be redeployed to Ukraine as part of a rebuilding project on a scale of the U.S.-backed investment in Europe after World War II, Zelenskiy said, quoting George C. Marshall, whose plan laid the foundation of the continent’s recovery."