As I noted a week or so ago I might do, today I picked up shares of Mail.ru, the Russian web company, for my personal account. These guys are owners of shares of the “Russian Facebook” as well as a couple other Russian social networking sites and their namesake Mail.ru, Russia’s biggest portal site.

I had been hoping to get some shares when it was genuinely cheap a couple weeks ago, but didn’t jump on it, and then couldn’t trade the shares because I wrote about them. Now I own a small position of the London-listed shares (they’re Global Depository Receipts, so they’re priced in US dollars but only trade in London, though they do occasionally also change hands on the pink sheets at MLRUY). I think the stock is undervalued given the rapid growth in broadband penetration in Russia and the huge online advertising growth in that country, and it’s cheaper than Yandex by my calculations, but the near-term catalyst that has me buying shares now even though they’ve gone up a little bit more than I’d like is that the facebook IPO that everyone’s chattering about might just drive Mail.ru shares up in the pre-facebook frenzy.

Why? Because Mail.ru owns a bit over 2% of facebook, making them the only real publicly traded way to get concentrated access to facebook before the IPO. If facebook hits over $100 billion on the IPO, as I think they probably will, then Mail.ru’s portion would be worth over $2 billion — a big chunk for a company that has a market cap of only about $6 billion. They also have some other holdings, so their non-operated assets account for more than half of their market cap, which makes the PE on 2011 earnings of about 40 seem reasonable (cut the market cap in half to account for the non-operated investments, and you get a PE of 20 on a rapidly growing company). Worth a gamble in my mind, I may sell if there’s a surprisingly huge pop on the facebook effect, but otherwise I think their potential growth is probably understated by analysts and investors right now.

Of course, it is Russia … so caveat emptor.

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