Written by: Aaron Katsman | July 31, 2007
By Aaron Katsman
IsraelNewsletter.com
Once again the Jim Cramer effect was proven with Given Imaging (GIVN). On the 22nd of June, the Booyah man had nothing but praise for the company and within a week Given’s stock had soared over 25%. Then as often happens when Cramer comes out bullish, the truck backs up all the way back to where he originally started from. He needs to keep it in drive and forget about reverse! In this case the low reached a few days ago was $1.12 higher than before he spoke.
With the stock down over 15% from it’s high of 3 weeks ago and earnings coming out tomorrow, suddenly Given looks appealing once more. As I have mentioned more than once, the company has started executing their business model, shown strong growth, and raised guidance for the rest of the year. Given Imaging has revolutionized the gastrointestinal diagnosis industry with the PillCam video capsule: a disposable, miniature video camera contained in a capsule, which is ingested by the patient and allows for the non-invasive visualization of the GI tract.
I wouldn’t be surprised if Given beats estimates and further raises guidance. If this happens the stock will soar and I am sure it will get an added boost as Cramer will revisit this on Mad Money, further moving the stock.
Please see our Disclaimer HERE.
Disclosure: Author’s fund is long GIVN as of 7/31/07.
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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.
Written by: Aaron Katsman | July 30, 2007
By Aaron Katsman
IsraelNewsletter.com
ECI Telecom (ECIL), a leading telecommunications equipment manufacturer, has another 24 hours to find another buyer with a better offer or else be acquired by the Swarth Group & Ashmore Management consortium, headed by Shaul Shani. Either the company is keeping its cards close to the vest, or no buyer has emerged. If an alternative buyer isn’t found then Swarth & Ashmore will purchase ECI at $10 per share.
When news of a potential alternative buyer surfaced the stock jumped a bit, but it sure seems that the market doesn’t believe they will succeed in finding another purchaser. That being said, getting sucked into the global selloff of last week, ECI stock is trading in the $9.35 range, about $0.50 less than it was trading just two weeks ago. Either the market doesn’t believe the Swarth deal is going to go through either, or there is a nice trade that would yield over 6.5% net until the deal closes. The company announced an extraordinary general meeting of shareholders for August 29, where, among other issues, a vote on the merger will take place. I haven’t heard any information to indicate the acquisition won’t be approved. In fact after speaking with some merger arbitrage hedge funds who see this opportunity, this seems like a “no brainer.”
I think that the market is mispricing ECI currently, and if you are looking for an interesting bet until the end of the year, this is a good opportunity.
Please see our Disclaimer HERE.
Disclosure: Author’s fund is long ECIL as of 7/30/07.
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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.
Written by: Aaron Katsman | July 27, 2007
By Aaron Katsman
www.IsraelNewsletter.com
Yesterday’s 300 plus point drop on the Dow made headlines in the media and the feeling was that the sky is falling. But a little perspective is needed. For many, this drop in the market was somewhat expected. While major market indices have made new highs, the breadth of the market has been deteriorating for some time. This week saw the market rise some on Wednesday led by Amazon’s 24% move, but in terms of the total market, decliners outpaced advancers by a 2-1 margin.
Investors need to keep an eye on the bigger picture. While the market is certainly jittery over the sub-prime mess, it still appears that this is an issue that is self-contained and won’t influence and spread to the rest of the economy. Corporate earnings have been stellar so far, with growth over 9%, which is much more than the pundits predicted. It’s also interesting to note that the recent market rally was lead by professional investors with most “Ma and Pa” investors on the sidelines. I think this will give the market support as we won’t have knee jerk selling and mutual fund redemptions by scared retail investors. The market tends to overdo it in both directions, and we could easily fall another 5% on sub-prime concerns. But then rationality will take over and people will realize that the global economic situation is good, corporate earnings are strong, and sub-prime is just an issue for sub-prime lenders and homebuilders. As a former teacher of mine, R’ Moskowitz used to say, “Don’t let emotions get in the way of your thinking process.”
Who knows what is going to happen in the next few days or weeks, but for all of you who want to sell out, here is a prediction for you. I think we are going to see either the Fed actually cut rates, or at least rumors are going to hit that they are thinking about it, in order to help out the housing market, and the market is, in the words of Dave Neihaus (Seattle Mariners radio announcer), going to fly, fly, fly away.
Please see our Disclaimer HERE.
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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.
Written by: Aaron Katsman | July 25, 2007
By Aaron Katsman
IsraelNewsletter.com
Check Point Software Technologies Ltd. (CHKP), which makes information technology security hardware and software, has finally provided investors with some good news. After having the stock basically go nowhere over the last 2.5 years, yesterday’s earnings report was an welcome change from the past few quarters of slow growth.
For the quarter that ended June 30, Check Point reported net income of $69.5 million, or 31 cents per share, compared with $65.7 million, or 27 cents per share, in the same quarter last year. Check Point’s revenue for the quarter totaled $176.2 million, compared with $138.9 million in the year-ago quarter.
They experienced solid double digit growth in both network and data security units, as well as doubling services revenue to $32.9 million. This has clearly become a strong growth driver for the company and I would look for continued growth in this unit.
They also announced that they had bought back 2.1 million shares and raised estimates for the rest of the year. The company is still sitting on lots of cash and the question remains what they plan to do with it. Are they going to make a purchase? Keep buying back stock? Pay a dividend? Or are they going to be bought?
They have been mentioned as a takeover target but my answer to all these questions is that they are going to keep trying to grow the business, probably through acquisition. Gil Schwed beleives that he can find the right acquisition and the return on it will be more than the 1.5% dividend for investors. He’s probably correct. Much of this quarter’s strong growth is a result of previous acquisitions finally coming home to roost.
Stockerblog likes Checkpoint as a way to secure your portfolio and I think he is right on. It appears that the company is back on track producing strong growth and that should put a smile on investors faces.
Please see our Disclaimer HERE.
Disclosure: Author’s fund is long CHKP as of 7/25/07.
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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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