Massimo Fuggetta presented his in-depth investment thesis on Ferrexpo (London: FXPO) at European Investing Summit 2013.

Producer of iron ore pellets with a 35 year old operation based in the Ukraine where it has extraction rights to the largest iron ore deposit in Europe. Iron ore market dynamics, Ukraine operations and 51% control by Kostyantin Zhevago make this an easy pass for most investors. However, these are all “known knowns.” The overlooked facts are: 1) the nature of the iron ore pellet industry leads to a sustaining “pellet premium”; 2) valuation of <5x 2013E EBITDA (<5x based on average EBITDA in 2008-12); 3) low debt (1.2x 2013E EBITDA); 4) Zhevago is easily labeled a “Ukrainian oligarch” but is actually a clever, self-made entrepreneur (see his track record and recent involvement in Brazilian Ferrous Resources alongside Carl Icahn). In Fuggetta’s words, the “stock is worth at least £3, a 2/3
appreciation from the current price.”

About the instructor:

Massimo Fuggetta started his career in 1988 with JP Morgan Investment Management in London, where he was an equity portfolio manager and then the head of global balanced portfolios. In 1999 he moved to Milan, where he was CIO and then CEO of Sanpaolo IMI Asset Management. In 2004 he founded Horatius, an asset management company which he ran until 2011. In 2012 he moved back to London, where he is currently managing the Bayes Fund. Massimo graduated in Economics at LUISS in Rome, has a D.Phil. and an M.Phil. in Economics from the University of Oxford and has taught Behavioural Finance at Bocconi University in Milan. He is a member of the CFA Institute and has served on the Editorial Board of the Financial Analysts Journal. In 2012 he started the popular Bayes blog (, where he writes, among other things, about investing and probabilities.

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