Russia's Rosy Future

[Jared2151]

Ten grand for speculative investing ? 

Man, I didn't know I was running with the big dogs.

(puts his tail between his legs and goes back up on the porch and curls up)

[cufflinks]

From todays WSJ see Scan link...

http://www.uzap.com/images/Russians2008.jpg

I am still learning how to post images on RUA - if anyone has a better idea how to make this look better I am open to suggestions...

Bottom line is it looks like the NRBs (New Russian Billionaires) also referred to in the USA as "smart money" are ignoring the gloom and doom end of the USA as we know it scenarios!  Looks like the "dead and gone USA" is a favorite place to redeploy their NRB oil and natural resource rubles at the moment!  God bless Yeltsin, Putin & Medvedev we need all the foreign capital investment we can get!  What do they know that we seem not to?

Cheers,

Mike "cuffllinks"

[cufflinks]

I give up anyone have half a bloody idea how to make this jpg scan show up in full size?

[ Guests cannot view attachments ]

[Manny]

(Attachment Link) http://www.uzap.com/images/Russians2008.jpg (Attachment Link)

I give up anyone have half a bloody idea how to make this jpg scan show up in full size?

Its too big for the page, I just tried it.

[Chris]

Is that big enough for you Cufflinks, it was 1.39 Mb......much too big, I will reduce it now and repost a smaller one -

[edit] Ok how is that?

Chris

[cufflinks]

Thanks Chris..

Do you have a tutorial on how to do this and the RUA forum guidelines (size, acceptable image formats) so I don't have to bother you guys in the future?

Back on topic... if the NRBs are rushing to quietly put their natural reseources wealth to work here in our basic industries (avoiding defense etc., so as not to be a lightning rod) perhaps the demise of the USA is a bit pessimistic

Cheers,

Cufflinks

[Chris]

Thanks Chris..

Do you have a tutorial on how to do this and the RUA forum guidelines (size, acceptable image formats) so I don't have to bother you guys in the future?



Cheers,

Cufflinks

Here you go Cufflinks http://ruadventures.com/forum/index.php?topic=2382.0 use Microsoft Image Resizer to reduce the photos, you wil find it here, a small programme you just download, the link is midway down the right hand side http://www.microsoft.com/windowsxp/Downloads/powertoys/Xppowertoys.mspx when you right click on any image you get a number of size options to save it as.

I find the Large or medium option fits better here. Read the above thread to find out how to insert them in the middle of text.

Chris

[jlogajan]

Russia reaches investors' tipping point after BP affair sours

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/27/ccbp127.xml&page=1

[Chris]

Russia reaches investors' tipping point after BP affair sours

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/27/ccbp127.xml&page=1

Gazprom are standing onthe sidelines wanting to buy or take a stake in TNK-BP, and when Gazprom want something they usually get it. Shell were recently forced to sell its majority stake in a project on Sakhalin island and TNK-BP was forced to do the same with the massive Kovykta gas field, seems the noose is getting tighter for foreign investment in Russia.

[cufflinks]

Interesting to note John Connor's Russia funds top ten holdings:

http://www.thirdmillenniumrussiafund.com/portfolio.php

Top 10 Holdings

Top 10 Holdings as of 03/31/08
Holding    % of Portfolio
Uralkaliy    8.25%
Norilsk Nickel    7.08%
Lukoil    6.45%
Sberbank    5.76%
Novatek    5.7%
RENGEN Utilities Fund    5.39%
Mobile Telesystems    4.83%
VimpelCom    4.54%
Gazprom    3.42%
Open Investments    3.20%

Anyone have any other favorites?

********************

The Telegraph.co.uk article was a very interesting and sobering read - that said it seems to validate John Connors portfolio above...

What always amazes me is the politically correct prism that many folks in the USA and The British Economic Empire still insist that our firms abide by overseas... Russia is after all a Social Democracy whereas we have shifted a great percentage of our manufacturing base to Red China and yet the rhetoric regarding Russia Putin Gazprom and Rozneft is loaded with hysterics - yes the men who have become NRBs (New Russian Billionaries) were not boy scouts.  One must be realistic with their wealth and while local banks are trying to tell us that we need to keep our corporate reserves in 1.5% safe interest bearing tax exempt municipal bonds...  When many of our municipalities are reeling and seeing their budgets slashed due to an oil induced real inflation rate of over 10%...  Well informed Russia funds are returning 30% plus compounded returns.  There are very few US funds that can project such returns with confidence over the next 5 years.

[shakespear]

I've been investing in Russian equities since October 1998.  They have been, without any question the best performing investments in my portfolio.  The vehicle I used is LETRX, the ING Russia Fund.  I got in when it was the Lexington Troika Dialog Fund and was no-load.  My no-load status has been grandfathered in by ING.  I think it has a 5.75% load for new investors now. 

Anyway, I bought my first shares on September 24, 1998 right at the tail end of the second financial crisis.  Prior to that event, the fund was one of the superstar high flyers.  With the crisis, the fund price dropped from over $18 per share on 12-31-1997 to $2 per share in about 9 months.  I bought in at $2.30 per share.  On Friday, the fund closed at $60.40.  The annual pre-load return on investment has been unbelievable!

1999:  +159.76%
2000:  -17.80%
2001:  +80.32%
2002:  +24.72%
2003:  +75.88%
2004:  +5.91%
2005:  +70.94%
2006:  +67.52%
2007:  +30.69%
2008:  +1.80% year to date

That's right, only ONE down year in the last 10 years. 

Total assets in the fund are $1,077,740,595 as of 4-30-2008.

The fund is the #1 rated performing fund in it's category for the 3 and 5 year periods. 

Top 10 Holdings are:

Sberbank RF  13.5%
Lukoil-Spon ADR  13.0%
OAO Gazprom  10.3%
OAO Gazprom ADR  6.7%
OAO Rosneft Oil Company GDR  4.9%
MMC Norilsk Nickel ADR  4.5%
Mechel OAO ADR  3.4%
Novatek OAO GDR  3.0%
Uralkali GDR  3.0%
Tatneft GDR  2.7%

From their 4-30-2008 Annual Report, their outlook for Russian Equities is as follows:

"The portfolio managers have a positive outlook on the Russian market for a number of reasons: 1) in our opinion, political uncertainty has been removed with the passing of the elections and the smooth transition to the new president, Dmitry Medvedev, while former president Valdimir Putin has been appointed Prime Minister; 2) commodity prices remain at historically high levels, and even if they fall somewhat we believe the Russian commodity companies will be very profitable; 3) valuations are attractive relative to emerging market peers; 4) the government is taking steps to provide tax reflief to the oil sector which, in our opinion, suffers from a particularly burdensome tax regime; and 5) we believe the macroeconomic outlook is strong which should provide a solid platform for corporate earnings growth"

"The focus of the portfolio is not likely to change dramatically in the near term as we believe the infrastructure and domestic consumption related stories will continue to play out.  Materials and the consumer sectors are thus likely to remain overweighted and we continue to look for further ways of playing these themes.  This is financed by the underweight in utilities, financial and energy.  Despite the Fund's structural underweight in energy, the positions in oil stocks are likely to be adjusted according to the expected favorable changes in the tax regime, while in the steel sector it looks increasingly likely that less favorable tax changes will be implemented."

I've been VERY happy with the long-term performance of the fund and would recommend it to anyone who is considering an investment in a portfolio of diversified Russian equities.  

[cufflinks]

Shake:

Any insight why only 1.8% so far this year while the US Oil patch reaps historically high profits?  Seems your fund is very heavily weighted in Big Russia Oil... John Connor's new favorites in 2008 also include fertilizer manufacturers as well (food prices booming along with oil on the global markets).

Now I can see why Manny is looking for 80% returns from his Estonian "No Bloody Damned Yanks" allowed fund

Not challenging your picks - fascinating historical returns - just curious for further insight to 2008 situation...

Thanks

Cufflinks

[shakespear]

Any insight why only 1.8% so far this year while the US Oil patch reaps historically high profits?  Seems your fund is very heavily weighted in Big Russia Oil... John Connor's new favorites in 2008 also include fertilizer manufacturers as well (food prices booming along with oil on the global markets). 

No.  The fund is UNDERWEIGHTED in oil.  Re-read the bottom two paragraphs of my post which is the fund manager's analysis of the potential of the Russian equity market.  That's the best answer I can give. 

[mendeleyev]

From the Baja Energy Investment newsletter:

When Vladimir Putin talks, investors in Russia listen. And some head for the door. Speaking at an industry conference this week, Putin, Russia's former president and now prime minister, spoke five sentences critical of one of his country's big steel companies, Mechel, and its billionaire chief executive, Igor Zyuzin.

In a sign of Putin's enduring power in Russia and around the world, that criticism came with a price: about $1.2 billion per sentence in lost shareholder value.

Such is the power of Putin's words - even after "stepping down" to prime minister in May - that shares in Mechel, a coal mining and steel company, plunged almost 38 percent on the New York Stock Exchange after Putin complained that the company was charging more to its domestic customers than to its foreign ones. The comments wiped out, at least for a day, about $6 billion in stockholder value.

Mechel, which closed Wednesday at $36.61 in New York, tumbled $13.77 on Thursday to close at $22.84, after Putin spoke. The company, which responded Friday, was up $3.15, or 13.8 percent at $25.99 in afternoon trading.

The company's shares trade as American depository receipts in New York. Putin spoke Thursday evening at the conference in Nizhny Novogorod, southeast of Moscow.

[cufflinks]

Holy Smokes - I did not see this one coming OUCH!

Billionaires feel the pinch

By Luke Harding

FOR the handful of Moscow pensioners gathered beside Karl Marx’s statue on Sunday there was, at last, something to be cheerful about: Russia’s communists are these days a marginal and increasingly doddering force, but what the Soviet Union was unable to achieve in 70 years — the overthrow of global capitalism — is now happening, including in Russia.

The most prominent victim is Oleg Deripaska, until recently Russia’s richest man. In May his fortune, according to Forbes magazine, was $28.6bn. In April, Deripaska was bullish. His metals firm, Rusal, could soon float in either Hong Kong or London, he said.

Six months later, Deripaska has hit the new economic reality with a crunch. Like many Russian oligarchs, he aggressively expanded his business by borrowing billions against the value of his company’s assets. Since May, however, these have shrunk. Russia’s stock market has tanked — losing a whopping 71 per cent of its value.

Spooked foreign investors have fled, because of the global credit crisis but also because of the war in Georgia and the Kremlin’s interventions in the market.

On Monday, the Financial Times reported that Deripaska was trying to borrow $2bn, which he needs by the end of this month to repay part of a $4.5bn loan from western banks that he used to buy a 25 per cent stake in the world’s biggest nickel miner. Suddenly, Russia’s richest man is out of money.

It is, perhaps, too early to talk about the demise of Russia’s oligarchs or the return of communism. But experts agree that Russia’s super-rich have taken an unprecedented hit. In May, Russia boasted 87 billionaires — second only to the US. At least half were likely to lose their billionaire status in 2009, according to the editor of Forbes Russia, Maxim Kalushinky.

However, some of Russia’s fun-loving elite are insisting that all is well. Stands at next month’s Moscow millionaires’ fair, where you can pick up a jet or space-age piano, are all booked out.

Last week, however, the financial news agency Bloomberg estimated Russia’s top 25 individuals had collectively lost $230bn over the last five months — with Deripaska dropping $16bn.

— The Guardian, London