Small-Cap Corner: High Risk, High Reward (BFR)

Investing in Argentina can be tricky. As investors in YPF S.A.

learned earlier this year, the Argentine government

. A penchant for nationalization could give foreign companies pause about expanding or initiating operations in Argentina, adversely impacting foreign direct investment in the process. Already a frontier market, a label implying a level of risk greater than an emerging market, Argentina's current business and political environments make investing in the country a high risk/high reward proposition. Those willing to take that risk and up the ante a bit with a small-cap name should have a look at BBVA Banco Francés S.A.

. At the end of last year, BBVA Banco Francés S.A., operated almost 270 branches in its home country. There is no getting around the fact that BBVA Banco Francés S.A., is a good news/bad news story. The good news is

. Additionally, it can be argued that after falling nearly 31 percent year-to-date, shares of BBVA Banco Francés are oversold and waiting to be bought by risk-takers. The bad news is, on top of the aforementioned Argentine macroeconomic factors, that BBVA Banco Frances is

. That gives sellers ammunition to punish the stock on the basis that BBVA Banco Frances is exposed to the Spanish sovereign debt crisis. Increasing the risk with BBVA Banco Frances is Argentina's own recent history. During the country's 2001 financial crisis, the Argentine government froze banks accounts, then devalued the currency. Thus, while Argentina is South America's second-largest economy behind Brazil, its banking system is nowhere as vibrant as Brazil's, Chile's or even Colombia's. Trading for less than $3.40, BBVA Banco Frances equates to a no-expiration call option on two factors: First, large structural improvements to the Argentine financial system. Second, improved sentiment by foreign companies and investors regarding the country's politics. Neither scenario may be likely to materialize in the near-term. Adventurous investors may wish to wait a while for BBVA Banco Frances to generate some upside. For more on Latin American banks, click

.