Owning a Russian Bank is less riskier than Sydney real estate

Today, I’m selling shares in TCS Group.

It’s a Russian Bank (3rd largest by customers) and financial services company.

I bought the shares (which are traded in London, priced in USD) at the $21 mark, 1 years and 3 days ago.

Today, they’re $87 per share.

A quadrupling return at any time, let alone within 12 months is simply extraordinary. It doesn’t happen often.

They were trading at a P/E of 5 back then and now I feel they are fully valued, especially as I think the share price has capitalised perhaps 3 years of earnings so quickly.

This is why I am so interested in the hunt of picking stocks in global equities markets.

While the fervour of residential real estate continues, I haven’t seen a Sydney house price quadruple in the past year.

<insert catty swipe>

Some may suggest that buying shares in a Russian Bank is a different risk profile than a residential property.

I’ll argue differently.

I think buying a residential property in one particular city, in one specific street, with a ‘north’ facing living room window and a net rental yield of 2% (which is a P/E of 50) with little chance to improve its (operating) revenue and limited ability to lower the fixed and maintenance costs…..is riskier.

July 1, 2021

by Rob Zdravevski

rob@karriasset.com.au