5 Israeli Stocks to Be Wary of in the Summer
Written by: Aaron Katsman | June 14, 2007
By Aaron Katsman
www.IsraelNewsletter.com
With news that local Israeli investors had redeemed more the 1 billion shekels (about $240 million) from mutual funds in the last few weeks, I got to thinking about how this large redemption could affect Israeli shares which are dually listed, trading in both Tel Aviv and in the US.
Interestingly enough it appears that the Israeli market has suffered in each of the last 9 summers, posting losses of between 5 and 17% in each (Tel Aviv 100 index). For investors in the US who want exposure to Israeli shares you need to watch out. If you look at the TA 25 index (large cap), for example, you will see that Teva (TEVA), Partner Communication(PTNR), Ormat(ORA), Elbit Systems(ESLT) and NICE Systems(NICE) have a combined total weighting of about 20% of the total index.
If redemptions continue and the seasonality of local Israeli stock weakness comes into play, these 5 stocks could be short term casulties, just becasue of local fund managers needing to sell to free up money for the redemptions. It’s also important to note that there has been a huge breakthrough of local Israeli ETF’s and index funds. Again, if we were to see a wave of selling hit, then they are going to be paring back proportionally, once again impacting these stocks.
Here at Israelnewsletter.com we have written positively on all 5 of these companies, and I am long all of them with an eye for the long term. For you short term traders who like trading in Israeli stocks, you may want to be cautious on these 5 names, for the technical reason given above.
Disclosure: Author’s fund is long ORA,TEVA,PTNR,NICE and ESLT as of 6/14/07.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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