Author Topic: Why are Russian stocks so cheap?  (Read 63398 times)

hardcorevalue

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Re: Why are Russian stocks so cheap?
« Reply #10 on: November 28, 2013, 02:21:55 PM »
In Soviet Russia, stocks short you!

+1


Lance

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Re: Why are Russian stocks so cheap?
« Reply #11 on: November 28, 2013, 04:37:39 PM »
Russia is sort of interesting to me.  It's not for the faint though.  I hold Gazprom and Lukoil and have considered the ishares Russian etf.  Check out Jim Grant's comments on Russian energy stocks: 

http://www.cnbc.com/id/101033958

Thanks,
Lance

rukawa

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Re: Why are Russian stocks so cheap?
« Reply #12 on: November 29, 2013, 07:30:29 PM »
So the argument is that the proper PE for Russian stocks is zero? Surely even with incredible levels of corruption there is a price which is too low? Also India is highly corrupt and yet their valuations are much higher.

fareastwarriors

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Re: Why are Russian stocks so cheap?
« Reply #13 on: November 29, 2013, 08:55:10 PM »
So the argument is that the proper PE for Russian stocks is zero? Surely even with incredible levels of corruption there is a price which is too low? Also India is highly corrupt and yet their valuations are much higher.

ďYou canít make a good deal with a bad person.Ē - WEB


There might be some value but at what price are you willing to pay?
« Last Edit: November 29, 2013, 08:57:09 PM by fareastwarriors »

JBird

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Re: Why are Russian stocks so cheap?
« Reply #14 on: November 29, 2013, 10:38:59 PM »
ďYou canít make a good deal with a bad person.Ē - WEB

There might be some value but at what price are you willing to pay?

At half of the value estimation.

"I think if itís cheap enough, you can afford more country risk or regulatory risk. Itís not complicated." CM

We're all seeing the same thing here. Russia's Government is corrupt. But this doesn't mean their entire stock market is valueless.

It's like investing in China where you have a Government sorely lacking in repute and virtue. There's this miasma of corruption and gross immorality in the markets. And in '04 there was PetroChina... selling at $36 billion. You could have said, the Government is a majority shareholder, this could all go wrong, and so many Chinese companies are frauds. And you'd have been right. There is a possibility of loss-- total loss. But estimate the odds for the possible outcomes. Are the odds in your favor? After you answer that I don't think you need to ask anymore questions.
Woman and wine, games and deceit, make the wealth small and the wants great. - Ben Franklin

plato1976

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Re: Why are Russian stocks so cheap?
« Reply #15 on: November 29, 2013, 11:54:57 PM »
What's the discount of large russian big oil like lukoil against majors in OECD countries ?
If the discount is bigger than 70% I will be glad to consider it...

ďYou canít make a good deal with a bad person.Ē - WEB

There might be some value but at what price are you willing to pay?

At half of the value estimation.

"I think if itís cheap enough, you can afford more country risk or regulatory risk. Itís not complicated." CM

We're all seeing the same thing here. Russia's Government is corrupt. But this doesn't mean their entire stock market is valueless.

It's like investing in China where you have a Government sorely lacking in repute and virtue. There's this miasma of corruption and gross immorality in the markets. And in '04 there was PetroChina... selling at $36 billion. You could have said, the Government is a majority shareholder, this could all go wrong, and so many Chinese companies are frauds. And you'd have been right. There is a possibility of loss-- total loss. But estimate the odds for the possible outcomes. Are the odds in your favor? After you answer that I don't think you need to ask anymore questions.

cr6196

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Re: Why are Russian stocks so cheap?
« Reply #16 on: December 01, 2013, 07:09:53 AM »
Well this thread makes the answer obvious, the perception of corruption. I don't see any actual appraisal of the risk though, the situation in Russia is certainly more complicated than "bad government"...go back fifteen years and the government was the victim, not the perpetrator, of theft. Russian billionaires have pulled off quite a PR coup in this regard...after stealing state assets using state money they convince everyone that the state is the problem. Either way, to find out if Russian stocks really are cheap (not why they are cheap) I think you have to understand the situation on its own terms. To me this suggests, at least, that the current situation isn't black and white. The current government has done far better than the "business-friendly" ones of the 1990s. Also there are obviously some well-run businesses outside of O&G, Magnit being perhaps the best known.

fareastwarriors

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jouni1

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Re: Why are Russian stocks so cheap?
« Reply #18 on: January 03, 2014, 02:00:36 AM »
At half of the value estimation.

"I think if itís cheap enough, you can afford more country risk or regulatory risk. Itís not complicated." CM

We're all seeing the same thing here. Russia's Government is corrupt. But this doesn't mean their entire stock market is valueless.

It's like investing in China where you have a Government sorely lacking in repute and virtue. There's this miasma of corruption and gross immorality in the markets. And in '04 there was PetroChina... selling at $36 billion. You could have said, the Government is a majority shareholder, this could all go wrong, and so many Chinese companies are frauds. And you'd have been right. There is a possibility of loss-- total loss. But estimate the odds for the possible outcomes. Are the odds in your favor? After you answer that I don't think you need to ask anymore questions.

for me it's super important to understand the country i'm investing in, at least on some level. russia is not a place i (or anyone not russian) can properly understand. the culture and way people think are just so different from what i'm used to.

so at some ridiculous P/E 1 valuation i might invest, but in the end i'd much rather do 10% per year in civilized countries than 20% in russia.

the point being, russia might not be as fair to investors as americans have come to expect if shit hits the fan. this makes it uninvestable for me. -100% feels like a possible outcome. in 30-40 years i'm probably going to feel like an idiot because of this, but thats life  8)

CorpRaider

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Re: Why are Russian stocks so cheap?
« Reply #19 on: January 03, 2014, 01:49:36 PM »
I personally don't like investing in places where there aren't good property rights and a solid tradition of rule of law.  Putin is likely to take your cookies if he wants them.  If enough people feel the same way it might result in lower multiples.
« Last Edit: January 03, 2014, 02:33:23 PM by CorpRaider »