Shaving the tarnished, hedging the Russians

by Travis Johnson, Stock Gumshoe | August 13, 2008 3:13 pm

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Source URL: https://www.stockgumshoe.com/2008/08/shaving-the-tarnished-hedging-the-russians/


4 responses to “Shaving the tarnished, hedging the Russians”

  1. brenda says:

    The story continues to look more and more grim here — Everyone seems to be trying to get their cash out of Russia at once, though the collapse of the RSX index has finally slowed, at least for a day.

    Personally this has worked out reasonably well over the last month. Vostok Nafta is down to a Net Asset Value of about $14 as of the end of August, a big fall from the $17 in July and the solid $20+ numbers earlier this year, and the shares have fallen significantly faster than that, pricing in a discount to NAV because of the rapid fall and the eagerness of investors to get out.

    The only reason this past month hasn’t been painful is my hedge in the form of RSX puts — those puts are keeping my losses under control, thankfully, though I certainly didn’t expect to see the puts go up by 300% in a few weeks as they did. With the security of that hedge, I’ll continue to hold as a long-term bet that perceptions of Russia will turn and they’ll rejoin the community of corporations in the months ahead. The puts expire in November, so I’ll have to make a decision by then if Vostok Nafta is still significantly impaired. I’ll let you know if I change my holdings, of course.

  2. leadgal says:

    RSX and Russian resource stocks may be one of the better contrarian trades this year.

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