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This investor ‘all in’ even though others are fleeing Russia, will the risk get ‘sweet fruit’?

Meanwhile, investors began to sell off all sorts of Russia-related assets, and hedge funds quickly bet the opposite. David Amaryan bought shares of energy giants Rosneft, Lukoil and Gazprom. In addition, he also bought shares of banks such as Sberbank and a number of retailers and mining companies in Russia.

When Amaryan’s stock purchase ended, the share of Russian shares in his company’s portfolio was about 55% of the $250 million, up from 30-35% before the conflict.

Investors who are on the hunt for “bargains” often prefer to buy when others are selling. This push has yielded “sweet fruit” in the US stock market, as the Dow Jones traded 291 times higher than the 2008 level. However, Russia is a different case when the country is under sanctions. of the West. The Russian stock market has lost a lot of value.

Big investors like Vanguard Group and Fidelity International are waiting to find a way to “get out” in the hope of not losing all of their capital. However, Amaryan has no plans to sell. He believes that Russian stocks can still be invested despite the sharp decline in prices.

This development is showing the scene of a Russian market being isolated by the world’s financial centers and dominated by “bargain” investors like Amaryan. He said: “We don’t see everything in rosy. Everything is very difficult, we just dare to take it.”

Amaryan’s Balchug Capital is registered in Armenia – where he was born, but now he lives and works in Moscow. According to sources close to the matter, Russian stocks accounted for an average of 70% of Balchug’s profits last year. The company has 11 employees in Moscow and 5 employees in Yerevan (Armenia).

Successful people often have their own way: This investor is all in even though others are fleeing Russia, will the risk get any fruit?  - Photo 1.

David Amaryan in the office.

Amaryan started his career in the financial industry on Wall Street. In 2003, he left New York for Moscow and joined Citigroup – where he worked as a consultant for super-rich individuals. He then moved on to another investment bank now acquired by Sberbank.

Amaryan founded his own firm, Copperstone Capital, in 2010. The company ran into trouble when the Securities and Exchange Commission accused it and other funds of insider trading. Amaryan had to pay a $10 million fine the following year but did not admit wrongdoing. He later changed the company’s name to Balchug and was not banned from operating in the asset management business.

This company has invested heavily in the Ng stock market after investors “shunned” this market after the merger with Crimea in 2014. In 2019, about 80% of Balchug’s assets were invested in Russia, according to the announcement. Russian market and transactions in New York, London. Amaryan has poured money into oil and steel businesses. The share of Russian stocks rose to 46% that year but took some profits when the pandemic hit.

In 2021, Amaryan is ready to return to Russia. Commodity prices soared and the company made good profits from investing in metals, along with Russian mining companies. One of them has paid out a dividend of up to 15% and this market trades at 30-35% lower than other emerging markets.

Earlier this year, arguing that Russia faced sanctions, not border conflict, Amaryan lowered the leverage used to invest in stocks, increasing the company’s cash salary to 15-17 % and reduce holdings in Russian and Western companies. Balchug used futures to hedge the ruble and bought a stake in a company that operates high-quality coal mines in Russia but sells coal to China for dollars.

However, a friend of Amaryan woke him up at 5 a.m. on April 24, and he saw that things did not go as expected. Putin’s launch of the military operation was “a shock” and from that moment Amaryan knew it would be a difficult period.

His first thought was how to protect the company and its customers, coming from all over Russia, the UK, the EU and the UAE when sanctions were imposed. He transferred more money in his company to Western banks outside Russia. 1 day later, he started buying again.

Successful people often have their own way: This investor is all in even though others are fleeing Russia, will the risk get any fruit?  - Photo 2.

Amaryan said he couldn’t believe that Russian blue-chip companies would go bankrupt even though the stock was plunging. He also asked clients to make sure they weren’t shy about the deal. “The biggest oil companies and banks can’t be worth several hundred thousand dollars,” he said of the massive drop in large Russian stocks on foreign exchanges.

Amaryan said he is optimistic. “In this world, even the worst things come to an end,” he told customers and employees. In addition, so far he has not received any request to withdraw the investment.

While waiting for the market to recover, Amaryan is considering US and European technology companies and looking for opportunities from the Chinese market. He predicts that the difficulty in Russia will last for the next 6-12 months. However, he is still willing to buy more properties in Russia at a suitable price.

When the market plunged at the end of March, Amaryan “paused” to wait for foreign investors to sell. He said the price needs to fall by at least 20-30% before he intends to buy more assuming the situation in Ukraine does not get worse.

In the long term, he thinks Russia’s relationship with China will help ease tensions from Western sanctions. According to him, oil, gas, wheat, cereals, nickel, palladium and fertilizer are commodities that strengthen Russia’s position as an important trading partner.

Refer to WSJ

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