|
 Mosenergo ADR (AOMOY-OTC)
Moscow remains the most prosperous city in Russia. As the monopoly utility for Moscow, Mosenergo (AOMOY-OTC) is in a strong fundamental position. But the stock has been a miserable performer over the last two years.
As a domestic utility, AOMOY is vulnerable to weakness in the Russian currency. Sales decline in real terms as the ruble devalues. Since electricity tariffs are regulated by the government, it is difficult for utilities to keep up with inflation.
On an asset basis, AOMOY remains dirt cheap. I anticipate that institutional investors will rotate from exporters like LUKOY and SGTZY to pure domestic plays like AOMOY following the presidential elections in 2000.
My 2000 target is US$8.
TyumenAviaTrans (TYAVY-OTC)
TyumenAviaTrans (TYAVY-OTC) announced a 10% workforce reduction and further cost-cutting measures. According to management, receivable collection is improving. TYAVY appointed a new Investor Relations manager to promote the stock in Moscow.
1999 mid-year results were terrible. Revenues declined by 30% to 274.6 million rubles. However, net loss improved to -82.1 million rubles.
TYAVY has absolutely zero liquidity. I am not aware of any sizeable trades in either the ADR or the ordinaries over the last six months. At current prices, TYAVY has microcosmic market cap of just US$4.4 million. Against TYAVY's US$80 million fleet of new aircraft, the stock price is ridiculous.
No one cares about the stock. However, as a small cap with a compelling long-term story, TYAVY should eventually participate in any further recovery in the Russian market.
 Hurricane Hydrocarbons (HHLFQ-OTC)
As an indirect affiliate of a participant in Hurricane's (HHLFQ-OTC) CCAA proceedings, I will refrain from issuing a 2000 forecast for the stock.
But I will say this: While Hurricane's merger plan is, in my opinion, fair to both shareholders and noteholders, there's no guarantee that noteholders will accept it. Hurricane remains an extremely risky holding. But if shareholders and noteholders reach an agreement, there is substantial upside for both parties. Even if shareholders and noteholders are unable to reach an agreement, it is possible that the court will impose a solution that is beneficial to all parties.
|
