Shares of Magomedov's companies collapsed after his arrest. What should investors do?

What's happened

Billionaire Ziyavudin Magomedov and his older brother Magomed were detained on the evening of Friday, March 30, and on Saturday the Tverskoy Court of Moscow arrested them until the end of May. The market immediately reacted: shares of companies where Summa has large shares fell.

Details

• The shares of Far Eastern Shipping Company (the parent structure of the FESCO group), where Summa owns 32.5%, fell the most - by 20%. In October, Magomedov said that Summa and its partners were preparing to sell a 35-40% stake in FESCO to RDIF and the Arab port operator DP World.
• Shares of the largest container shipping operator TransContainer - Fesco owns 25% of it - fell in price by 4.7%.
• The main asset of Summa, Russia's largest Novorossiysk commercial sea port, has fallen in price the least - Summa owns about 25% - decreased by 2.8%. In February, it became known that Summa was preparing to sell its stake in the company to another shareholder of the port, Transneft.
• The market as a whole does not seem to care about the arrest of the Magomedovs. Today, the Moscow Exchange index increased by 0.77% at closing.
• The Magomedovs are accused of creating an organized criminal community and fraud; on the totality of the charges, they could face up to 30 years in prison. Here The Bell talked about all 7 episodes of the Magomedov case.

What to do with shares

• Definitely sell, says Vladimir Kapustyansky, leading specialist in the trust management department of KIT Finance. It’s not too late to do this: while the shareholders are under investigation, each new episode of the investigation will lead to a new downfall.
• But if you are not afraid of risk and are ready to wait out a period of uncertainty, you can leave the papers, says Otkritie Broker analyst Timur Nigmatullin. Shares - first of all, FESCO, where Summa has the largest share - will be stormy until the Magomedovs are given a final verdict.
• After this, there is a chance that the shares will return to their previous values, says Nigmatullin. Summa was not very actively involved in operational activities; the shipping company had problems - for example, it allowed technical defaults on ruble and Eurobonds. New management can give hope for change, Nigmatullin suggests.

What's in it for me?

Situations like the Magomedov case provide risky investors with the opportunity to profit from the volatility of the securities of a company in a difficult situation.

Anastasia Stogney