The Best Kept Secret In Moscow?

On a hot summer day in Moscow in 1996, William F. Browder invited one of the largest investors in his fledgling Hermitage Fund to meet the chief executive of a Russian oil holding company. To their surprise, the CEO urged them to sell his company's stock, saying he expected its price to fall. Instead, Browder bought more. "The books looked good," he explains. "I figured he was talking down the price so he could buy more himself." Good figuring. Since June, the stock is up more than 2,000%, and Hermitage has made $100 million from the investment.

Browder's instincts have made Hermitage one of the best-performing offshore funds this year, returning more than 313% through Aug. 15. Moscow-based Browder's close relationships with local brokers, frequent visits to Russian companies, and a more stable ruble have helped the fund gain almost 910% since its inception in April, 1996. Assets have grown from $25 million to $816.7 million as of July 31.