The Saudi Arabia of Natural Gas- Gazprom

We are believers of buying at distressed prices, but we never try to catch a stock in a free fall.

As such we believe that Gazprom (OGZPY) offers potentially rich rewards. The Russian market which at one point fell 80% from its 2008 peak was in a free fall. For now it appears that this free fall has halted. Many a billionaire oligarch had peldged shares of Russia's largest companies to buy more shares, either in Russia or abroad. Their DB and BNP bankers gave some multi-billion dollar margin calls. So a falling market begot more selling and more margin calls. . . a true death spiral. This seems to be finished.

As Gazprom supplies Europe with more than 25% of its natural gas, we view it as a strategic company, as does the Kremlin. With over $500b in forex reserves, we view the Kremlin as being able to support Gazprom, their crown jewel.


Additionally, we think that $6 is a floor on natural gas given the vicious commodity sell off. We are also expecting a harsh winter. Gazprom has halted its free fal,l and as of today, is in the $19/share level. We view Gazprom as a high return speculation at this price. The risk could be outright nationalization, but the Kremlin already owns 51% of the company, so while possible, we view such scenario as unlikely.

We are opening a small position of Gazprom today.

Traders and investors are reminded to risk small amounts of capital in each position and only add to them as their position shows them a profit. Doubling down on losers has led to more busts in investing and trading than in Vegas.


As always we are not making recommendations for anyone, but outlining our personal investment decisions. We are not registered investments advisors and do not give investment advice.