Russia’s Pain is Century Aluminum’s Gain

　　But bulls beware. It could have been worse. Arguably, it should have been worse.

　　And might yet. The fund has about two-thirds of its portfolio invested in Russian stocks—and the main Moscow stock index, the RTS, just plummeted 11% in U.S. dollar terms in the wake of the sanctions. As a result, CEE’s discount to the value of its underlying investments, which was 12% at the end of last week, is likely to narrow.

　　Anyone who thinks Russian investments like CEE are an easy contrarian buy should think twice. While FactSet’s broad index of Russia stocks looks dirt cheap on 6.5 times forecast earnings, it has been there for years. The last time Russia was in the eye of the world’s outrage, three years ago, over the Ukrainian crisis and Moscow’s seizure of the Crimea, Moscow fell as low as four times forecast earnings.

　　Russia’s loss, however, was Century Aluminum’s (CENX) gain. Stock in the major domestic producer jumped $2.03, or 12%, to $18.82 as US sanctions against major Russian metal companies sent aluminum prices soaring. Century was already expecting to benefit from the administration’s tariffs on some imported aluminum. The stock trades on 13 times forecast earnings, a significant discount to smaller company stocks. The S&P 600 small cap index trades on 17 times forecast earnings.

　　Small company stocks underperformed their larger peers on Monday, as the relief rally quickly ran out of steam. The S&P 600 eased 2.46 points or 0.23% to 931.83, while the large cap S&P 500 eked out a 0.3% gain. The average small company stock in the 600 index fell 1.7%.