Are there enough SNP shares to go around?
Small markets come with low liquidity but some other interesting advantages
OMV-Petrom has a colorful past.
I’ll leave these links here.
https://adevarul.ro/economie/privatizarea-petrom-cum-a-ajuns-in-mainile-2227737.htm
https://www.cotidianul.ro/misterioasele-tranzactii-cu-actiuni-omv-petrom/
The above links paint a curious picture of this giant oil and gas company and how it changed hands a few times to eventually end up with more foreign owners that control the few remaining shares after Austria’s OMV’s 51% stake and the Romanian’s Government 20% stake. The article in ZF.ro from above is from 2016 and details a Bloomberg report that says Franklin Resources own 1.24%, Norges Bank own 0.37%, Blackrock 0.05%… you get the globalist picture.
Basically the big guys and local institutional pension funds own a combined 24.64%. According to 2020 numbers, pension funds own 8.5% so that leaves 15% for the big guys. According to more recent 2023 numbers, pension funds own close to 14%, with around 10% left for our overlords.
There’s 3,51% left for retail investors.
It is also currently one of the biggest companies in Romania’s economy, and contributes last they checked around 7% of the country’s yearly budget through tariffs, tax on dividends, profits, taxes on salaries and similar so under Austrian leadership it’s been thriving. Has recently announced all sorts of deals in green energy, and some plans together with Romgaz to exploit Neptune Deep.
So I’ve been wondering about statistics involving Romania’s capital markets. This article tells us of a recent influx of investors on BVB, bringing the total to 170 thousand investors. Up big over the years, I think it was under 60 thousand around 2018.
So that article tells us that 20% of local retail investors just own government bonds - okay let’s say that leaves us with 130 thousand retail investors. And I can guess there are a quite a few that do not like companies where the government has a controlling stake (SNG, SNN, H2O).
OMV currently has a 17,8% weight out of the BET index that tracks the 20 top Romanian blue chip companies, placing it at second place, under Banca Transilvania’s 20% weight and before Hidroelectrica’s 17% weight.
There’s 62,3 billion OMV shares.
3.51% means 0.0351*62.3 billion = 2,186,730,000.
Let’s say that we’d divide the retail float to 100.000 people. That would give 21,867 shares to each.
At current levels, that works out to around 14,000 RON, or $3.083.
That’s… surprisingly low, for me.
I can’t help but wonder, what would happen if these hypothetical 100 thousand people were to not sell their shares?
Aren’t mostly people in it for the dividends anyway - so we’re looking at predominantly buy and hold types?
What got me wondering, is that the guy that does the iceinvest substack bought for his kids so far at least 30 thousand shares of SNP. So math checks out - in my opinion, his kids will likely be in 10 years time one of the largest retail owners of SNP.
I’m thinking that since considering that the number of BVB investors is on the rise, those who get in at these levels will end up being a big fish in this tiny pond.
I went ahead and similarly divided the float destined for retail for SNG, SNN and H2O and here are the results.
SNN - 0.0475*301 million = 14,297,500. Divided by 100 thousand, we end up with 142 shares. Today, trading at 49 ron that means 7k ron, or $1,532.
SNG - 0.0526*385 million = 20,251,000. Divided by 100 thousand, we get 200 shares - 9,6k ron or $2,255 at today’s 48 ron share price.
H2O - 0.0315*449 million = 14,143,500. Divided by 100 thousand, we get 141 shares, or around 18k ron or 4k usd at a 129 ron share price.
That’s… not a lot of shares to go around, for a growing number of investors. And we’re close to reaching 200 thousand retail investors on BVB.
So take this investor that wanted to own 0.0001% of the free float available to the public of each of these companies; he would need almost 11k USD to invest today ($10,900 to be specific). I know it isn’t traditionally how one would think of it, but it’s a crude representation of the stock market and it helps me view this abstract number. This doesn’t sound expensive for me.
Actually I’ll make a note of this and compare this 10.9k USD (49.486,00 RON) invested on 3rd march 2024 over the next couple of years with the SP500. The SP500 is currently trading at 5k USD, VUAA is currently trading at 96.6 USD. So our hypothetical owner would have the option of either 21,867 SNP shares, 142 SNN shares, 200 SNG shares, 141 H20 shares or 112 VUAA stock.
I think this exercise will help me figure out how I’m doing even though it isn’t similar to the allocation I got (I own all 4 Romanian companies listed - SNP, SNG, SNN, H2O and no VUAA or other ETF).