Hello Everybody,

At T&T Capital Management (TTCM), we often find ourselves investing in areas where most fear to tread, due to short-term concerns that are often in the headlines.  We do this because most market participants react emotionally and don’t put the emphasis on fundamentals, so by buying securities that are out of favor based on these short-term issues, we are able to uncover the best values.  These are the securities that offer the most upside potential and the least risk, with risk being defined as the risk of permanent losses of capital.  On December 8th I wrote an article on Russia:

Russia Scary but Too Cheap to Ignore

where I laid out the risks and our rationale for being comfortable investing in Russia.  Not surprisingly,  I had several people tell me that I was crazy to invest in Russia because of all the uncertainty.

It is now about 5 months later and I thought it would be helpful to provide a quick update on how these positions have been performing.  Below are the year-to-date numbers for our 4 Russian investments:

LUKOY- Up 32.8%

OGZPY- Up 23.7%

RSX- Up 32.1%

YNDX-Down 2.1%

Now to be clear, we don’t want to emphasize short-term performance as we believe it is very likely that we will hold these positions for several years, as they have 200-300% upside potential.  The point is just to show that when everybody is so bearish, often that is the best time to be bullish.  It is almost impossible to pick bottoms, but by being long-term oriented and having the conviction to invest when the facts tell you it is a good idea, one can position themselves to outperform the market.  We’ll continue to provide updates as time goes by, but I thought it would be helpful to keep you posted on these positions, as that newsletter article definitely garnered quite a bit of attention.  Thank you very much and if you have any questions, please don’t hesitate to contact me!