Thursday, July 10, 2014

Seeking Alpha: Controversial Gazprom Still Cheap, Still Risky

Recommending Russia's giant natural gas company Gazprom (OTCPK:OGZPY) to readers last year was a controversial pick and one that has not worked out as well as I might have hoped. I went into it well aware of the attendant risks of owning a company that is virtually an arm of the Russian government and that has a reputation for not working and playing well with others. While the roughly 3% gain since then isn't horrible, it has lagged other turnaround energy stories like Statoil (STO) as well as its home index (though only by a couple of percentage points).

Given the Russian government's combative attitude toward Europe and the West, I'm less bullish that Gazprom's valuation discount is going to improve in the near future. I continue to believe that only modest growth can support a fair value well above today's price and that Gazprom has significant restructuring opportunities, but it takes a strong contrarian streak to invest here. I continue to see opportunities here for aggressive investors with a long-term orientation, but I can't fault investors who will argue that there are easier ways to generate alpha in the market over the next 12-24 months.

Follow this link to the full article:
Controversial Gazprom Still Cheap, Still Risky

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