Buy shares in a Ukrainian company while Putin is invading. Why not?
Not a large position, paid just under 149p (on 14th March). The P/E ratio is somewhere below 2. The downsides are pretty obvious:
- Right now production is probably zero. I assume the workforce has more important things to do.
- Even if they're still producing they can't ship their product anywhere.
- If Russian forces make it to Ferrexpo's production facilities they might level them.
- If there's a long-term occupation then Russia might seize ownership of Ferrexpo or their assets.
- Even if Ukraine kick out Russian forces they might nationalize industry or levy punitive taxes as part of their economic recovery plan.
But I figure there's plenty of upside at the current price:
- Putin probably (hopefully) regrets getting into this and right now just wants to get sufficient leverage to cut a favourable peace deal.
- Ferrexpo is based in the middle of the country. The war will be won or lost before the Russians get that far.
- They're cheap, and apart from the war they look pretty good quality - no debt, investing in improving the quality of their product, stupendous margins.
Is it immoral to invest in a company whose share price has cratered because of a war? I don't think so:
- I'm not taking advantage of anyone, just buying at the market price. Indeed if there are Ukrainians who want to sell because they need ready cash, and everyone stopped buying, then that would clearly be a bad outcome.
- I don't have a problem with what the company itself is doing.
- I have no conflict of interest - owning Ferrexpo shares isn't going to make me start supporting Putin.
I did also consider investing in Polymetal, but I think that would have been morally dubious - but luckily my broker won't trade them, so the decision is out of my hands.
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