Doubling Up on the Russian Telecom Story

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

There is plenty of action in the local Russian telecom market that is overwhelming the negative news surrounding global equity markets. Subprime woes notwithstanding, our current Global Bull Market Alert holding, Vimpelcom (VIP) hit an intraday record high on Wednesday of $45.48 after it agreed to buy Russian Internet services company Golden Telecom Inc. In paying $4.3 billion ($105 per share) to combine the two Moscow-based companies, Vimpelcom has created a company that can offer broadband Internet access along with phone service.

And despite Vladimir Putin’s political shenanigans, the Russian market is attracting plenty of positive sentiment from big name global investment strategists — the kind whose views shift billions of dollars of institutional money into stocks. Investment bank JP Morgan recently published an upbeat note on Russia, emphasizing the Russian telecom sector in particular. The global strategist of another leading investment bank recently did the same in the London-based Financial Times. And MBT has been popping up in some of the leading hedge fund portfolios as well — including super secretive Renaissance Technologies, arguably the best-performing hedge fund of all time.

It’s also worth noting that Russia has actually been a relative underperformer in global emerging markets this year, with its index barely notching double-digit percentage returns in 2007. So if there is a market among the BRIC (Brazil, Russia, China, India) markets due to start the year with a bang, it is Russia. And with January a traditionally strong month for Russian stocks, my bet is that MBT is set for a strong short-term sprint during the next few weeks.

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The choppiness in global markets continued this week, defying expectations of a traditional Santa Claus rally. But with the world awash in liquidity, and big money making its bets for 2008 (hint: it probably won't be on the United States) the weight of money still is behind our Global Stock Investor picks. With our global megatrends still intact, it's a good time to add to your positions. As Warren Buffett advises, "Be greedy when others are fearful. Be fearful when others are greedy

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