Yesterday I told you how “due diligence” saved publisher Steve Brill from buying a Moscow newspaper from people who didn’t own it.
Today I get to tell you my own latest Russian escapade. I tell you this largely to make you feel good (who doesn’t enjoy another person’s problems, especially when they’re not contagious?) but also to help you understand how a Russian would pronounce the word “caper.” It’s –KEHprrrrrrrr-. (Rhymes with pepprrrr.)
It was last October and my friend and I were going to visit a Moscow brokerage firm. Here in America, there would have been a big sign out front, an electronic ticker in the window, maybe a digital clock. But Moscow’s capital markets are still young. Merrill Lynchski this was not. We entered an unmarked door and were greeted by three big guys with holstered guns. They came at us with big plastic metal detectors and frisked us. Carefully. (Due diligence?)
Then they lead us down a quarter-flight of stairs, along a narrow corridor, around to the left, up a half-flight of stairs, around to the right, down some stairs, through a door, up some stairs — this was not a place you could escape from easily — and finally to the conference room, which may once have served as a tiny interrogation room, on the second floor overlooking the street. Not that you could see the street. The curtains were closed.
We talked turkey. Specifically, Rostelekom, Russia’s main phone company, then selling for 91 cents a share.
Their notions of valuation were quaint — earnings? dividends? what this mean? — and had mostly to do with “stocks been going down, will be going up soon.” But I had read that Russian companies were wildly undervalued, even considering the risks, and I wanted to help these guys out. They were clients of a partner of mine, trying to make it as beez-ness-men in the new Russia. I want to see the new Russia succeed. Plus, it’s kind of fun (albeit really stupid) to be able to tell friends, “hold on a sec — it’s my broker in Moscow.”
I bought 25,000 shares of Rostelekom. (That’s also kind of fun to say; 25,000 AT&T would have been about 24,000 beyond my reach). Then, a couple of weeks later, I bought shares in a giant Russian nickel complex, too.
It’s easy. You just send an e-mail placing the order; receive your confirm by e-mail; wire the money to an account in Cypress (I don’t know and I don’t want to know); and for the next 11 months you get weekly e-updates.
Paper? Who needs paper?
When Rostelekom had climbed from 91 cents to $2.56, and when my partner told me he was beginning to have his doubts about these clients of his, I decided to sell. A small earlier sale had gone smoothly — $1,450 had actually cyberblipped from Cypress to my bank account in the States. But this one, in late July, was the real test. Would I get my money back and a rather huge profit?
I got my e-confirmations that the trades were done. Hello, $67,000!
I got my e-confirmations that the paperwork would be completed in early August and the cash wired immediately thereafter.
I got an “unforeseen technical difficulties” e-message notifying my of a minor delay, and then another explaining that there would be two wires — one right away, returning my investment, the other a few weeks later, my profit.
But it’s now been about eight weeks and so far that’s all I’ve gotten.
And do you want to know something really silly? I actually think I’m going to get some of, and very possibly all, my money. I guess that shows you how naive I am.
Just to improve my odds a little, I’m in the early stages of hiring a firm that collects Russian debts. I’ll let you know what happens.
But isn’t it nice to live in a country where, by and large, routine commerce can be conducted without much worry? In Russia, they still have no checking accounts or, for the most part, credit cards. Here we are going “check-free,” and they haven’t even gone “check” yet.
The sensible way to speculate on Russia, as I’ve noted in the past, is through the Templeton Russia Fund (TRF on the New York Stock Exchange). It’s risky. But at least if you call your broker to sell you’re likely to have the cash a few days later.
Quote of the Day
Governments are necessarily continuing concerns. They have to keep going in good times and bad. They therefore need a wide margin of safety. If taxes and debt are made all the people can bear when times are good, there will be certain disaster when times are bad.~Calvin Coolidge
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