FEEXY - Ferrexpo: Sea Change In Election Odds Is A Speculative Tailwind

2024-07-07 02:21:10 ET

Summary

• Ferrexpo is highly speculative because its operations are in Ukraine facing catastrophic risks, and its stock price is almost entirely dictated by the evolution of the war.
• Currently, its logistics is curbed by the ongoing war, which impacts its cash flows by limiting utilisation, but has not impacted its sustainability as a going concern financially.
• The end of the war would eliminate the risk of destruction or other catastrophic events, and would allow for production to resume at higher levels. Institutional stock support could resume.
• As detailed in our last coverage, an end to the war seems more likely with a new administration in the US, a country which has a lot of leverage over the Ukrainian war effort.
• The shift in the betting odds after the recent presidential debate needs to be considered for Ferrexpo's trading dynamics. It is playing in Ferrexpo's favour.

In our last coverage of Ferrexpo ( FEEXF ) (FEEXY) we highlighted that it is only interesting as a vehicle with which to speculate on the outcome of the US presidential election. Otherwise, it is of course an extremely risky and binary play whose price is almost entirely subject to highly idiosyncratic speculation around the Ukrainian battle lines and momentum in the war which has already had severe consequences for Ferrexpo's produced pellet volumes and poses a risk of total capital impairment for investors. Its political risks and possibility of total capital impairment make it quite uninvestable....

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