Syndicate
Staying Informed Research
While we like to make the most of the stock screener as much as possible to find stocks for our "microcap mutual fund", we also make use of other tactics to find gems in the rough. One of these tactics is basically screening the news and reading articles about current proceedings. Upon screening this information, if something catches our eyes, we will run a stock screener to see if any stocks fit the story that caught our fancy. We will give you a few examples.
In November 2004, Ukraine was entangled in a harsh election dispute that resulted in what is presently known as the "Orange Revolution". The incumbent candidate Viktor Yanukovych favored Russia over the West and his economic policies without a doubt reflected this. The challenger, Viktor Yuschenko, had associated himself with Western ways and vowed to increase ties with Europe and the United States. I remember thinking, "If this Yuschenko guy wins, it is quite sure that he opens Ukraine to Western companies." As Ukraine was still emerging from its post-Soviet economic funk, its economy was still quite underdeveloped. We sensed opportunity! We ran our stock screener for anything related to Ukraine. Our search turned up no results so we modified the stock screener to look for anything related to Eastern Europe. We found a small mutual fund, the Morgan Stanley Eastern Europe Fund, Inc. (NYSE: RNE). We checked out the fund and we liked what we saw. It was small with a market cap of $100 million and it had decent volume. We decided that if Yuschenko won the election, we were going to take a position in this particular mutual fund. Justice prevailed in this condition and Yuschenko was declared the winner of the runoff election. The Orange Revolution had worked! The citizens of Ukraine had pulled off a peaceful coup of a corrupt government and their country would be benefit from their actions. We intended to benefit from their actions as well! A little while after Yuschenko assumed the control of Ukraine; our predictions were validated as the small Eastern European mutual fund increased in value by nearly 20%. Over the next few months, the news of Ukraine disappeared from the Western press and RNE also faded. Nevertheless, RNE enjoyed a steady rise and paid a nice fat dividend over the remainder of the year.