Written by: Aaron Katsman | June 20, 2007
By Aaron Katsman
www.IsraelNewsletter.com
Once again good news on the Israeli economic front has been met by a Merrill Lynch analyst warning that Israel’s admission to the OECD will be the end of the Israeli capital markets. As I posted when this news was actually released, just as former Bank of Israel Governor Dr. David Klein needs to relax, so too does this analyst. Let’s remember that about $21 billion of foreign investment came into Israel in’06. Now Merrill is out there doing their best chicken little imitation by saying, “The moment Israel is defined as a developed rather than an emerging market, not one foreign investor will invest time and resources here, and this will herald the end of the era of foreign investment in Israel.” He added that the switch to the developed market category would be a “natural disaster.” A little dramatic don’t you think? “Not one foreign investor will invest time and resources here,” I guess that means Merrill is closing down their shop in Tel Aviv, and heading out of town. No more fat investment banking fees it appears.
He argues as well that the local economy accounts for just 2% of the MSCI Emerging Markets Index, and its share in the global investment pie would fall to 0.2% if Israel is admitted to the developed markets index. What he neglects to mention is that there is a heck of a lot more money under management in developed markets than in emerging markets. So Israel’s weighting may drop, but the amount of money available to invest is substantially more. In addition, don’t forget “overweighting.” If fund managers believe Israel is an attractive investment destination, then they can overweight their position to a much higher level than 0.2%. In fact I was speaking earlier to a good friend of mine at a large and well respected value shop on Wall Street, and they have Israel overweight to the tune of 5%.
I am not sure what Merrill’s agenda is in publishing such doomsday research. But what I can say is that OECD admission is good for debt servicing, and is a feather in the cap of a nation who 5 years ago was on the brink of economic collapse. Let’s all take a step back, take a deep breath, and be proud about how far Israel has come. In fact, if you look at other headlines in today’s paper you will find: Babcock and Brown Opens Office in Israel. They are an Australian international investment firm with tens of billions of dollars under management.
Like what you see? Sign up to receive daily updates from IsraelNewsletter here.
Please see our Disclaimer HERE.
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.
Written by: Aaron Katsman | June 19, 2007
By Aaron Katsman
www.IsraelNewsletter.com
You can’t imagine how many times I am asked where I can find one company that is a medical diagnostic company, a company that develops stem cell therapies, and one of the leading real estate companies with holdings in Central and Eastern Europe and India? Well actually I have never been asked that question, because it’s such a bizarre mix of companies, but it’s a mix which has proven to be very profitable for shareholders of Elbit Medical Imaging (EMITF).
Elbit Medical Imaging engages in the initiation, construction, operation, management, and sale of shopping and entertainment centers mainly in Central and Eastern Europe, Israel and recently in India. As Roger Nusbaum discusses the appeal of international real estate, Elbit Medical’s portfolio maybe enough to justify the $1.1 billion market cap the company sports. As CEO Motti Zisser says, “After close to two years of thorough study of the Indian market and building the team and infrastructure of our organization in India, we are now moving at the pace we have been accustomed to throughout the years of our operations in Central and Eastern Europe. We are confident that due to the needs and size of the Indian market, our activities in India will prove to be as successful as our European activities have been and more.”
For investors who want some emerging market real estate exposure, this is a great company to consider for investment, as their track record proves.
But there is much more to Elbit Medical than an intriguing real estate portfolio. The company also owns very large stakes in two of the most exciting private (though an IPO is definitely in the cards) companies Israel has to offer. Insightec ltd., develops a product that combines MRI technology with focused ultrasound in order to treat serious diseases such as bone, liver and brain tumors, without the invasive procedures that are currently used. Elbit Medical owns over 50% of Insightec, and some analysts think that an IPO valuation of close to $1 billion is a very real possibility. That would give Elbit Medical approximately $500 just in Insightec.
The other private company is Gamida Cell. Gamida Cell is developing a line of cell therapy products for the treatment of such diseases as leukemia and lymphoma. It’s expected that they will begin marketing this by mid-2009. With all the attention stem-cell companies are getting as well, Elbit Medical might be sitting on a position worth hundreds of millions of dollars.
A few years ago, the magic word on Wall Street was finding “synergy.” There isn’t a lot of synergy between Elbit Medical’s businesses, but that doesn’t mean that there is no value here. Though actualization of their holdings is another year or so in the future, if it works out and if you add up the sum of the parts, the stock appears to be trading at cheap levels.
Like what you see? Sign up to receive daily updates from IsraelNewsletter here.
Please see our Disclaimer HERE.
Disclosure: Author’s fund is long EMITF as of 6/19/07.
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.
Written by: Zack Miller | June 19, 2007
Marketwatch out with the story about Epix Pharma (EPIX) receipt of a letter from the Food and Drug Administration (FDA) that sent shares soaring 17% on Monday. Get this: the letter DID NOT approve Vasovist, the company’s blood-pool imaging agent in the US. What was important here was that the FDA said it would not need additional clinical trials conducted. Explaining the news, EPIX President Andrew Uprichard said in a statement, “The FDA has now accepted that the image acquisition in the four previously conducted Phase III studies was of sufficient quality to potentially provide substantial evidence of the efficacy of Vasovist.” Vasovist is sold in 32 countries outside of the U.S., including Canada and all 27 member states of the European Union. Epix does not have any other products on the market.
Forbes publishing on Ceragon (CRNT). It seems shares have reached a year-high trading range on the heels of an upgrade and positive notes from analysts predicting solid growth for the Israeli communications equipment company. First Albany had recently upgraded the stock positing, “The key reason for our upgrade is our belief that Ceragon’s relationship with Nokia (NOK) and Siemens (SI) should continue through 2008, and possibly beyond, easing our earlier doubts about the relationship beyond 2007.”
CIBC out positively on NICE (NICE). CIBC believes earnings and revenue forecasts are intact with a possible upside surprise this quarter for the security company.
Haaretz/The Marker out with comments from Morgan Stanley that the Israeli economy is on fire. Even after posting growth of 6.1% in the first quarter of 2007, “growth could accelerate down the line this year, if domestic demand continues to climb. “
Written by: Zack Miller | June 18, 2007
Zack Miller
www.IsraelNewsletter.com
Optibase (OBAS) wins Huawei deal to provide advanced MPEG-4/H.264 encoding and streaming as part of their IPTV offering. No details on size of the bid but good Tier-1 approbation.
Elbit (ESLT) continues on its string of small wins with a new win announced today. The $14MM deal is to supply the Aviator’s Night Vision Imaging System/Head-Up Displays for helicopters of two NATO member countries.
York Capital, an $8 Billion NY-based hedge fund, has been all over the local press following their 2006 purchase of Psagot Ofek Investment House. Globes now reports that they’ve made a $2.7MM investment in NetManage (NETM), run by CEO and Chairman, Zvi Alon. NetManage markets software for integrating, web enabling, and accessing enterprise information systems. The company currently has a market cap of about $46 million. It ended the first quarter of 2007 with sales of $7.7 million and a loss of $3.6 million.
Interesting Frost & Sullivan report out saying that Israel’s biomed industry is growing quickly. The report cites that 80% of current biomedical companies functioning in Israel were funded only within the past 10 years. “This can be seen in the huge number of patents registered in Israel, the largest number of patents per capita in world for medical devices, and the fourth largest number in biopharmaceuticals. Israel is one of the top 20 countries in spending per capita in the field,” said the report.
Disclosure: Author’s fund is long ESLT 6/18/07.
Please see our Disclaimer HERE.
Like what you see? Sign up to receive daily updates from IsraelNewsletter here.
**************
Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com
Page 3 of 11«12345»...Last »
