Ilya Kuntsevich left Russia in search of a more lucrative career path in the United States. But with the motherland’s economy on its heels after a massive sell-off of the Russian ruble, he sees opportunities in the old country for L.A. businesses and business people.
Kuntsevich, managing partner of Beverly Hills hedge fund Beverly Investment Group, said a big part of the recent currency crash was a result of the Russian central bank being caught off-guard by the corporate sector’s demand for dollars in the face of plummeting oil prices. The ruble’s value has declined about 70 percent compared with the dollar over the last year, as U.S. sanctions and a soft energy market have taken a toll on the heavily oil-dependent Russian economy. That has essentially created bargain shopping for those in the market for Russian products.
“The export opportunities right now and the purchasing opportunities are immense,” Kuntsevich said. “There’s a boom in buying Russian merchandise because it’s so cheap. If you have dollars, you might buy things 30 percent cheaper than you find here.”
On the flip side, local companies that bank on Russian customers should be negatively impacted by the dramatic decrease in purchasing power. But not all industries will be affected equally.
“I don’t think there will be any impact at all on Hollywood movies, because they’re very popular in Russia and make big dollars on releases,” Kuntsevich said. “But tourism will be impacted significantly because Russians will not be able to afford higher airline prices.”
Kuntsevich said that the falling oil price has been a wake-up call for the Russian economy, which has boomed in recent years as it did little more than sit back and collect petro dollars. But with that safety net fraying, Russian companies will be forced to innovate – or else. And despite the country’s historic reputation for shoddy airplanes and cars, Kuntsevich actually believes Russian military hardware and software companies are poised to take advantage.
One example: Russia’s affinity for dashboard-mounted video cameras is known to Americans mainly because of some hair-raising YouTube videos. But with today’s economic circumstances, the companies making those cameras might see opportunities abroad, particularly in a carcentric city like Los Angeles.
“Now Russia can export all kinds of military stuff,” Kuntsevich said. “In surveillance tech and things like dash cams, Russian companies are pretty good. There’s a real market for that.”
Downtown L.A. money manager DoubleLine Capital had a banner 2014. The firm’s total assets under management grew to $64 billion, up more than $14 billion over the year. And with Bill Gross’ unceremonious departure from Pacific Investment Management Co. in Newport Beach – and investor money following – the financial world has anointed DoubleLine’s flamboyant boss, Jeffrey Gundlach, as the new bond king.
DoubleLine has continued to ride that momentum by launching the Long Duration Total Return Bond Fund, which opened Dec. 15.
While the firm’s main fund has a fairly short duration of slightly more than three years, the new fund expects to put together an investment portfolio with an average duration of 10 years. In the bond world, duration is a measure of how long it takes for a bond to be repaid by its internal cash flows.
Bonds with a longer duration are more vulnerable to a rise in interest rates, which depresses bond prices. But as rates have remained at their near-zero level even as the U.S. economy has rebounded, some investors might be losing their fear of an imminent rate hike in favor of the stability of a longer-term coupon.
Gundlach and DoubleLine portfolio manager Vitaliy Liberman will manage the new fund. It will invest primarily in securities backed by home mortgages guaranteed by government and quasigovernment agencies such as Fannie Mae and Freddie Mac.
John Ahn, president of West L.A. brokerage and investment bank B. Riley & Co., has joined the board of directors of Koreatown’s Hanmi Financial Corp. … Wells Fargo & Co. has named David DiCristofaro lead region president for the greater L.A. area. DiCristofaro, a 17-year veteran of the San Francisco financial giant, will oversee Los Angeles, Riverside and San Bernardino counties … Rob Laughlin has been named regional market manager for Citi Private Bank in Southern California and Arizona. Laughlin, who has been at Citi since 2011, was formerly at New York investment firm Neuberger Berman.
Staff reporter Matt Pressberg can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 230.
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