Sberbank is quite profitable and has handled sanctions quite well historically. It bounced back quite well after the Crimea invasion and those who bought then did quite well (4x plus some dividends). The current situation is definitely worse and far more risky but the price plunge is also quite dramatic at over 90% down from last year’s peak. Further, residents of most Western countries might not be allowed to hold them soon given the sanctions and Russia is restricting foreigner’s ability to sell the shares for now. So this is quite probably a zero and a gamble but my thinking is that there is some price at which it might be a decent gamble.
I am unlikely to be restricted from owning the shares due to my nationality or residence so that is one less risk in my case. However, I still have to get it OTC in the US so clearing risk is definitely there as well as nationalization by Russia or some other event that prevents my selling or receiving dividends. OTOH, if the current peace talks somehow succeed or something else causes sanctions to be lightened in a few months, it could easily be a 5 or 10 bagger.
Hence, this is not an investment but a gamble but might be a gamble with far better odds than Las Vegas. (I put in a fraction of a percent of my portfolio into Sberbank yesterday.)
I am not particularly interested in owning Sberbank shares, personally.
(a relatively well run bank, in normal times, which these times aren’t)
But I have to say, it does qualify for the falling knives board.
Market cap a few months ago over $100bn.
If you use the recent low London price for the shares to calculate it, the number comes out to $190 million.
Down 99.8%. to 1 penny a share.
It’s up to 5 pence now! So it’s only down 78% today.
52 week high 21.64.
Y! shows their div yield at 100%. I don’t know if there’s a way for me to purchase their shares, and I don’t want to know. Doubt I’d live long enough to right that wrong.
IB reports that Global OTC is going to stop all trading in Russian ADRs after Friday. Further, I was also informed by customer service that I cannot convert the ADRs to Russian shares either due to sanctions. So, even if Sberbank goes on to recover, it looks like I am SOL. I wonder if ADR holders have any rights in this situation. After this, I am going to trust ADRs a -lot- less. I have never had problems with them before and hold or have held many like BP, Shell, Fairfax, 9988, Jardine Matheson etc. but never realized that the conversion option which gives them value can just be cancelled like that by the government governing the exchange. I can understand losing my investment because the govt of the company’s jurisdiction or operations did something like nationalizing it or if the company went bust. But losing it just because it is held OTC in a jurisdiction which is opposed to the firm is definitely a bummer, especially since both my home country and country of residence have no sanctions against Russia.
I think they earned more than US$2 equivalent per ADR last year.