August 2009 RPFE has a long only unlevered"fundamental value" strategy - and is UCITS III-compliant. The fund selects well-managed companies benefiting from Russia's fast-developing market economy. RPFE takes positions in mainly blue chips – allowing the fund to offer daily liquidity. But by harnessing PCM's unique experience and contact network across corporate Russia, it also invests in mid-cap restructuring situations, providing high-return opportunities. The Fund is advised by Igor Danilenko.
364.3 111.9 236.2
7.2 1.7 3.5
93.0 53.4 64.2
-28.1 -40.3 -32.3
-43.7 -51.2 -42.0
58.1 12.5 54.5
The RPFE gained over 7% during August – extending its YTD outperformance against RTS and MSCI Russia benchmarks to 29 and 40 percentage points respectively. RTS rose 3.5% last month, while MSCI Russia gained 1.7%. Within the telecoms sector, the Fund liquidated its investment in Center Telecom, selling to a strategic investor at a significant premium to market price. The Manager considers the selling price to reflect the full potential gain from this holding, particularly given uncertainty over the timing of future sector consolidation. Some of the Fund's biggest oil & gas investments performed well, with TNK-BP (+12%), Surgutneftegaz (+13%) and Bashneft (+12%) all outperforming. Bashneft announced it is planning a 48% production increase during 2009 and 2010, which would make the company one of the fastest growing in its sector. Among the Fund's retail stocks, Dixy and Magnit both gained. The sector remains resilient despite economic challenges. Shares in brewer EFES sky-rocketed intra-month on the back of a buyout offer from its controlling shareholder Anadolu EFES, but moderated towards the end of the month. The Manager considered the offer too low and did not accept it. Accordingly, Anadolu failed to reach its goal of raising its stake above 75%. Russia's steelmakers and fixed line telecoms also performed well in August, as market sentiment improved. Some of the proceeds from its Central Telecom divestment were used to boost the Fund's exposure to blue chip energy stocks such as Gazprom, Rosneft and Lukoil. The money was also used to add to investments in other fixed-line telecoms. The Fund also continued to liquidate non-core positions in the engineering sector.
TNK-BP Holding
10.4%
Oil & Gas
11.8 *
4.8
3.2
Value
Surgutneftegaz
9.1%
Oil & Gas
13.4 *
4.0
3.5
Corp. Gov
Gazprom
7.8%
Oil & Gas
2.1
5.3
4.4
Value
17% dividend yield 11% dividend yield, large cash pile To benefit from increase in domestic prices
Bashneft
7.5%
Oil & Gas
12.1 **
2.8
1.9
Value
Cheap valuation, new owner to improve efficiency
Lukoil
7.5%
Oil & Gas
0.1 *
8.2
6.4
Value
Russia's largest private integrated oil company
Kazmunaigaz
5.7%
Oil & Gas
1.1
5.7
8.5
Value
Net cash is equal to 60% of market capitalisation
Rosneft
4.3%
Oil & Gas
4.5
12.5
7.1
Growth
Comstar
3.8%
Telecom
-2.0
8.7
6.3
Restructuring
MGTS cost-cutting, Svyazinvest strategic transaction
Bashkirenergo
3.8%
Power
-4.9
5.9
3.9
Restructuring
Unbundling and new ownership would eliminate significant discount to SOTP
Tatneft
3.7%
Oil & Gas
2.6 **
7.4
6.3
Value
Total
Will benefit from low taxes on its large exposure to Eastern Siberia
Investment in cheap assets may increase profitability by 50% in 3-5 years
63.7%
** Preference Shares
* Weighted Performance
August 2009 Alpha:
-0.21
Beta:
0.89
Correlation of the Fund's movement with its benchmark.
0.89
Measurement of the Fund's performance attributed to movements in its benchmark.
R-Square: Sharpe:
Measurement of the Fund's risk adjusted performance against its benchmark.
-0.59
Measurement of the Fund's risk adjusted performance.
Treynor:
-0.25
Measurement of the Fund's return based on systematic risk.
Tracking:
13.23
Measurement of how closely the Fund tracks its benchmark.
Ann. Std Deviation:
37.66
Measurement of the Fund's overall volatility.
PCM is the largest portfolio investor operating in Russia today - controlling investments worth around $2.8bn. Founded in 1996, PCM has consistently topped performance charts for emerging market funds. The firm has built a stellar reputation for its thorough research and "active" investment approach. PCM is now a major shareholder in some of the leading companies in Russia, Ukraine and Central Asia – holding board seats accounting for around 45% of our total assets under management. Our international client base includes international pension funds, insurers, endowments, family offices and private banks, as well as sovereign wealth funds. PCM has a strong presence in Moscow - with around 20 staff based in offices close to Red Square. The majority of the staff are Russian. PCM also has offices in London and the Caymans. The company's philosophy is "long-only/activist" and use no leverage. Investments are made on a fundamental value basis, using a bottom-up approach, with top-down themes. Portfolios tend to be concentrated.
Since Inception
364
236
2000
-34
-30
2001
114
89
2002
18
18
2003
60
31
2004
8
0
2005
135
112
2006
46
53
2007
5
7
2008
-77
-71
2009
93
64
CAGR
18
14
Investment Manager Prosperity Capital Management Ltd, PO Box 10448, Suite 204, The Crighton Bldg 256 Crewe Road, Cayman Islands, KY1 1004 Tel +345 745 8500 Fax +345 745 8501
Investment Manager Seligson and Co (Helsinki) Investment Advisor
Prosperity Capital Management (RF) Ltd.
Location Home Page Status Domicile ISIN Code
Finland www.prosperitycapital.com Open-ended with daily dealing Finland FI0008808183 (K shares) FI0008802004 (A shares) Daily No
Trading Listing Date Of Inception Number Of Shares Total Fund Assets Fees Placing/Exit fees Redemption NAV/Price Release Administrator Custodian
Client Services Prosperity Capital Management (UK) Ltd, 2nd Floor, 6 Cavendish Square London. W1G 0PD Tel +44 20 7299 6950 Fax +44 20 7299 6951
08 March 2000 0.64 million EUR79.49 million K Shares: 2.9% mgmt fee, A Shares: 1.4% mgmt fee, plus perf. fee Up to 2.5%/0.5% (within 6 mths) Daily, on dealing day Bloomberg (SELPRUS), Morningstar Seligson and Co (Helsinki) +358 9 6817 8200 Citibank (Moscow)
Investment Advisor Prosperity Capital Management (RF) Ltd, 7th Floor, 10 Nikolskaya Street, Moscow 109 012, Russia Tel +7 495 961 2810 Fax +7 495 961 5816