TCS - TCS Group Holding PLC

[Maple Fun]

Reasons Not to buy TCS:

 

*The business is in Russia

*It's a BANK

*Oil is dying

*No one is paying due to covid etc...

*The founder is charged with a tax fraud by IRS

*How can it not be a fraud?

 

Reasons to buy:

*Arguably the best Fintech company in Europe and beyond

*Hugely profitable, 40%+ ROE, high growth

*Low valuation

*Shareholder friendly: still paying a dividend now, did some stock buybacks in March

*Innovative: is there any other bank doing something similar like this?

https://www.tinkoff.ru/eng/media/news/08062020-investments-box-eng/

Moscow, Russia — 8 June 2020.

Tinkoff announces the launch of Investment Box, Russia’s first service for micro-investing offered by a bank. With Investment Box, Tinkoff customers will be able to regularly save small amounts of money when making everyday purchases with debit cards. These savings will be automatically invested in Tinkoff’s Permanent Portfolio exchange-traded funds.

 

 

[Foreign Tuffett]

Let me get this straight:

 

1) Founder/controlling shareholder is a Russian entrepreneur

2) At some point he acquired American citizenship

3) After TCS Group IPO'd, he decided he didn't want to be an American anymore (some days I feel the same way, LOL), so he renounced his citizenship. In doing so however, he concealed that he is ultra wealthy, thereby possibly committing tax fraud under American law.

 

https://www.justice.gov/opa/pr/founder-russian-bank-charged-tax-fraud

 

4) Now he is under house arrest in London. He may or may not end up being extradited to US.

5) He is also battling cancer and might die

 

So what happens to his 40% of his stake in the company if he dies or goes to prison in the US? Does a big chunk get sold to pay his tax bill? Does Russian government make a move (ala Yukos) to try and take control of the company to fold it in to Sberbank? Does his wife inherit it? This is one of those Russian companies incorporated in Cyprus and listed in London, so not immediately clear to me what legal regime company is ultimately operating under.

[Maple Fun]

Are you saying it might be even a positive?

Let me get this straight:

 

1) Founder/controlling shareholder is a Russian entrepreneur

2) At some point he acquired American citizenship

3) After TCS Group IPO'd, he decided he didn't want to be an American anymore (some days I feel the same way, LOL), so he renounced his citizenship. In doing so however, he concealed that he is ultra wealthy, thereby possibly committing tax fraud under American law.

 

https://www.justice.gov/opa/pr/founder-russian-bank-charged-tax-fraud

 

4) Now he is under house arrest in London. He may or may not end up being extradited to US.

5) He is also battling cancer and might die

 

So what happens to his 40% of his stake in the company if he dies or goes to prison in the US? Does a big chunk get sold to pay his tax bill? Does Russian government make a move (ala Yukos) to try and take control of the company to fold it in to Sberbank? Does his wife inherit it? This is one of those Russian companies incorporated in Cyprus and listed in London, so not immediately clear to me what legal regime company is ultimately operating under.

[Foreign Tuffett]

Are you saying it might be even a positive?

Let me get this straight:

 

1) Founder/controlling shareholder is a Russian entrepreneur

2) At some point he acquired American citizenship

3) After TCS Group IPO'd, he decided he didn't want to be an American anymore (some days I feel the same way, LOL), so he renounced his citizenship. In doing so however, he concealed that he is ultra wealthy, thereby possibly committing tax fraud under American law.

 

https://www.justice.gov/opa/pr/founder-russian-bank-charged-tax-fraud

 

4) Now he is under house arrest in London. He may or may not end up being extradited to US.

5) He is also battling cancer and might die

 

So what happens to his 40% of his stake in the company if he dies or goes to prison in the US? Does a big chunk get sold to pay his tax bill? Does Russian government make a move (ala Yukos) to try and take control of the company to fold it in to Sberbank? Does his wife inherit it? This is one of those Russian companies incorporated in Cyprus and listed in London, so not immediately clear to me what legal regime company is ultimately operating under.

 

No

[Maple Fun]

Ok. I guess that’s why I listed as a reason not to buy

[Maple Fun]

The story keeps getting better:

 

They just announced RAS numbers for May: now retail accounts keeps climbing and stood at RUB 403B v.s. 349B in December.

 

CEO's recent interview is worth a listen.

[Maple Fun]

It is getting more and more likely that TCS will be included in the MSCI Russia Index in the next review

 

[Maple Fun]

It plays out very well:

 

MOSCOW (Reuters) - Russian bank TCS Group Holding TCSq.LTCSGDR.MM is in talks to sell its online bank Tinkoff to Russian Internet giant Yandex YNDX.O for $5.48 billion, the two companies said on Tuesday.

 

The idea of integration between the two industry leaders was first publicly floated in June 2019 when Oleg Tinkov, the main shareholder of Russia's TCS group, told here Yandex Chief Executive their companies together would be worth more than $20 billion.

 

“The parties have come to an agreement in principle on a transaction that would consist of cash and share consideration worth approximately $5.48 billion or $27.64 per Tinkoff share...,” Yandex said.

[Foreign Tuffett]

Congrats on this working out.

[Maple Fun]

Yandex jumped 12% on Nasdaq upon the news..

The combination makes a lot of sense..

Uncertain about the stock portion of the deal, but still a lot of room for TCS to catch up...may be a good candidate for special situation play now...

[Maple Fun]

Deal seems busted...MSCI inclusion back on the table

[Maple Fun]

No luck with MSCI this time..need to wait until next reveiw in May 2021

In the meantime, share price keeps edging up