Aaron Katsman
www.IsraelNewsletter.com

Shares of Audiocodes (AUDC), an Israeli provider of Voice over IP (VOIP) technology, are surging on the heels of a strong earnings report. The company reported record earnings, an indicated strong growth for the remainder of this year as well as for 2009.

This small VOIP company has long been overlooked by the financial community, but the fundamentals make this an interesting play for long-term investors.

The company has a PEG of less than 0.6, and has over $137 million in cash and cash equivalents. Audiocodes has a market-cap of $177, which means that it’s trading at a discount to revenues as well. Throw in a 4,000,000 share buyback and this could be a sleeper. 

Investors should be aware that for the last 3.5 years, shares in Audiocodes have gone in just one direction, straight down. With that being said, today’s report, potentially, maybe the jump-start needed to break the downward spiral, and be the catalyst to help propel shares going forward. 

Disclosure: Author’s fund has no position in AUDC, fund has no position in any other stock mentioned as of 4/30/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is 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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The entire interview with Cliff Goldstein of AMIDEX is part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com.

Can you tell us how AMIDEX got started?
Cliff Goldstein: I’m a lawyer by trade. In 1998 I saw some really compelling advances being made by Israeli technology companies. I decided to go to brokerage firms to see if I could find a way to invest in this ingenuity. I was specifically looking for a mutual fund that invested in Israeli companies. There wasn’t anything out there. After speaking directly to brokers, it was also clear to me that brokers themselves weren’t really knowledgeable about what was occurring on the ground in Israel. I then went to Israeli Economic Mission to the U.S. to complain about the lack of retail investment opportunities.

Why aren’t there Israeli investment products in the U.S.?
CG: I think part of the problem was that there was no benchmark for those Israeli companies trading in the U.S. There is really no comprehensive index because a significant portion of Israeli marketcap trades in the U.S. and in Tel Aviv. There were indices for the Tel Aviv Stock Exchange (TASE) but not one that included New York as well.We decided in 1999 that we could address this barrier and create our own index that included both U.S. and Tel Aviv listed Israeli companies. As this was a time before Exchange Traded Funds (ETFs) had really developed, we borrowed from the protocols developed by the WEB products. We created an index that included 60% of total Israeli marketcap. To get here, we needed 35 companies to get 60% of the total universe. Most of the companies in the initial index were Israeli companies that traded in the U.S. Given what’s transpired over the past couple of years in the U.S. and the growth of Israeli  businesses, we now see the inverse: about 60% of our firms trade in Tel Aviv and the minority in the U.S. It was these 35 companies that comprised the original AMIDEX35. We could then back test historically and when speaking to investors, this really looked good from a performance point of view. When we launched the actual fund in June of 1999, 68% of the companies traded in the U.S. and the remainder in Israel. We thought that the volatility and risk of political disruption would be highest in Israel so we were comfortable with this mix. It’s interesting to think that soon after we had the meltdown of the dot com boom. (Continue »)

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The entire interview with Gemini’s Carmel Sofer is part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com.

Can you tell us a bit about Gemini?
Carmel Sofer, Partner: Gemini was one of Israel’s first VCs and is 15 years old. We now manage more than $600 million via 4 funds. We’ve just closed our 4th fund and are in the process of raising our 5th fund, which we’re targeting to be $200 million. We’ve had over 30 exits including Saifun and recently, Traiana. (Continue »)

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Aaron Katsman
www.IsraelNewsletter.com

Perrigo (PRGO) a company that develops, manufactures and distributes over-the-counter and prescription pharmaceuticals, announcedthat they received approval from the FDA to market for a Nicotine based smoking cessation gum.

This is another in a long line of wins the company has experienced of late. Shares of Perrigo have bucked the market trend over the last 6 months and have continued to move sharply higher. Commenting on the news, CEO Joseph C. Papa said, “This approval of orange-flavored, coated nicotine gum extends our leading store brand position. Our expanded range of smoking cessation products also includes coated mint-flavored gum, coated fruit-flavored gum, uncoated gum and lozenges.”

The estimated market for over-the-counter nicotine gum and lozenge products is around three quarters of a billion dollars. So this is clearly a big potential earnings  driver for the company.

I have never smoked so I have no idea what it’s like to try and stop. But from what I understand, the hardest part is trying to break the cravings from nicotine addiction as well as certain activities that you do when smoking. That those activities ‘call’ for you to smoke.  The nicotine gum helps negate the cravings associated with smoking, freeing you up to work on your ability to do certain activities without smoking.

As someone who chews gum like it’s going out of style, but also can’t refuse a cheese danish, I hope they come out with a gum, that helps cut the craving for eating and helps you to lose weight.

Disclosure: Author’s fund has a position in PRGO, fund has no position in any other stock mentioned as of 4/25/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is 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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