IsraelNewsletter.com had the chance to sit down with an amazing, young pair of college students who are leading an innovative initiative that will give college students hands-on exposure to the Israeli economy by learning and by doing.  The TAMID Israel Investment Group at the University of Michigan is just the tip of the iceberg for this pair.

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Tell Us A Bit About TAMID Israel Investment Group.

Eitan Ingall, President: This whole idea started because Sasha Gribov and I are both the Presidents of Pro-Israel groups on campus at University of Michigan. Sasha is head of the Hillel group, American Movement for Israel and I am currently heading up a pro Israel political advocacy group called the Israel Initiative for Dialogue Education and Advocacy. We have both noticed a serious void in hasbara (Israel advocacy) on our campus in that there is a serious lack of sustained and substantive interaction with Israel. Sure, anyone can go hear a lecture or seminar for two hours, but what about interacting with Israel in a way that runs a bit deeper?

We also noticed that for all the hummus and pita we were providing the students and for all the guest speakers coming to campus to talk about Israel, no one was talking to the business students. No one was talking about Israel’s economy and speaking directly to the future Jewish business leaders of the world.

So, those two things—the combination of the lack of substantive and sustained interaction, coupled with a serious lack of interaction with Jewish business school students—were what drove us to establish this fund.

What we also understood, however, was that in order to attract business minded Jewish students to Israel, we had to reach them in their space. What are they interested in? What makes them tick? And how do we align these interests with the greater collective of Israel and the Jewish people?

What are their interests? investing and finance. So we came up with quite a simple way to align these interests with Israel—we created a student-led investment group that manages a portfolio of Israeli companies. It’s actually quite simple. These students are all joining investment clubs anyway. They want something they can slap on a resume and something that will give them real life experience with the investment landscape.

So, we said, how about we have them do all this while investing in Israel? Its quite a simple solution.

And so we created the TAMID Israel Investment Group.

The structure of the group is also very simple and is designed to target the specific interests of each student. The Executive Board is made up the fifteen most talented Jewish business minded students at the U of Michigan. We shouldn’t say only Jewish, we do in fact have a non-Jew on the board as well.

How does the board work?

EI: The board is broken down into 4 teams: investing, marketing and PR, IT and fundraising. The investing team has students who are incredibly well-versed in investing—some of them have already begun to manage money professionally. The marketing team is currently led by a girl who recently had a job with Walt Disney’s Marketing department. A member of the fundraising team was the president of his regional USY chapter and has raised tens of thousands of dollars.

The IT team has a few kids double majoring in Computer Science and business—they’re designing a highly advanced and interactive website for the group.

As you can see, we’ve made it a priority that each student is working in an area that interests him or her. This isn’t the usual, mundane form of Israel advocacy. What we’re trying to say with TAMID is, “This is Israel and all that it has to offer you. This is Israel’s economic environment.” Plain and simple. In a way that students can relate to and enjoy. TAMID brings a perspective on Israel that these students can fit in with their professional aspirations.

The board also has the opportunity to interact with four support bodies.

The Advisory Board is made up of top Israeli executives and fund managers who have commitment to interacting with students once every financial quarter. This gives students an opportunity to interact with Israelis who have built the economic culture of the country and will leave a lasting impression on the students.

The Resource board are American and Israeli lawyers and accountants who are working to establish and maintain the infrastructure of the organization

We are working with three U of Michigan business school professors who are overseeing the general operations of the group and are assisting with the educational curriculum.

We will also be working with Israeli students at Israeli universities to align our generation of business minded students. Students will have the opportunity to interact through various forms of media and will work together on various projects.

Please explain a bit about how it all works.

EI: There are three phases to the fund: Education, Investing, and Fund Management

During the educational phase students are engaged in a curriculum that teaches them about general investing and Israel-specific investing through a series of seminars, lectures, guest speakers and interactive activities. It is during this phase that students will have their first interactions with Israel’s economic landscape in an effort to prepare for investing.

Next, the students make the initial investment, and thus begin investing the portfolio.

We are in the process of raising $1,000,000 [ed. Fundraising activities are taking place through TAMID's channels.  IsraelNewsletter.com is not party to these activities]. Professional Israeli account managers will manage half of this in order to reduce risk. These account managers, however, have committed to maintaining a high level of interaction with the students in order to teach them about the Israeli economic environment.

The other half of the portfolio will be managed by the Executive Board, led by the investing team. They are working to create a conservative growth investment strategy that will allow the students to interact with Israel’s economy. The students will use what they learned from the educational phase of the program coupled with their interactions with the professional account managers, to successfully manage this half of the fund.

For the duration of the program, students are actively managing a portfolio of Israeli companies. They are making day to day investment decisions while interacting with Israeli company executives to be constantly learning about Israeli markets. The Executive Board thus becomes fully engaged with Israel’s economic environment.

So if the principal of the fund comes from tax-deductible donations, not investments, what do you plan to do with the returns?

EI: The fund is a perpetual fund, hence the name TAMID. It stays on the college campus and the money stays in the Israeli market. Therefore, a large portion of the returns are re-invested in order to grow the fund.

The remainder of the ROI will be used to establish the TAMID Business Scholarship Fund, where we will be providing financial compensation for business minded students to work in Israel. We have begun working with Israeli companies to set up infrastructure to house 1-2 business students for an internship. Our dream is that instead of working one summer for an investment bank in Manhattan, students will come work in prestigious financial internships in Israel, which they can use to further their own professional aspirations.

How did you elect students to the board?

EI: We sent out an initial press release in February of 2008. After receiving an overwhelming number of inquiries, we set up formal interviews with the most qualified students over the course of the following two weeks. We then selected 15 of the brightest, most experienced students for TAMID’s Executive Board. It is a prestigious group of students. These are the students going on to top jobs in the American financial sector and working their way to becoming business leaders and top executives.

How is this an answer to divestment?

EI: The initial idea for the group actually came out of a response to divestment. As two leaders of campus pro-Israel organizations we knew resolutions calling for the divestment of Israel are brought before the regents of the University of Michigan. To counteract these resolutions in the past, students have launched pro-Israel flyering campaigns and invited high-profile speakers to campus to speak about Israel. However, we felt none of this was enough and we felt we could come up with something more creative and more effective that would have a profound impact on our generation of Jewish college students.

So, at 4am in the study lounge, we looked at each other and said: if they want to divest from Israel, we are going to invest in Israel. Not only are we going to invest in Israel financially, but are also going to invest human capital in the future of the State of Israel.

Do you see this as something that could work beyond the University of Michigan?

EI: Absolutely. We have purposely created an extremely scalable model—TAMID Michigan is just the pilot site. Within the next year there will be a TAMID UPenn, TAMID Harvard, and TAMID Northwestern. Within the next five years, there will be a TAMID National Organization which will be setting up sites at top universities across the U.S., each site managing its own $1 Million portfolio of Israeli companies. We are talking about millions of dollars being invested in the Israeli economy and hundreds of students having sustained, substantive interaction with Israel in a way that has never been done before.

What’s the end game?

EI: TAMID will lead a paradigm shift by creating a new status quo where business students across the nation are active stakeholders in the economic growth of Israel. This organization will be a bridge between the passions, interests and aspirations of American business students and the Israeli economy which, until now, had been inaccessible to these students. As such, TAMID will realign the mismatch of personal and collective by engaging the personal and professional goals of American Jewish business students. TAMID has made Israel’s economic landscape accessible to the full time student by utilizing the tangible incentives of professional opportunities, experience and success.

We are building a massive network of business minded Jewish students and exposing them to Israel in an unprecedented way. Our vision is create a sustainable, highly interactive ecosystem of businessmen working in symbiotically with Israel’s economic landscape. We are thus opening direct access to a pipeline of the next generation of Jewish philanthropists and cultivating the next generation of investors in Israel.

Why invest in Israel/what makes Israel interesting as an investment destination?

EI: Israel has a flourishing economic landscape. Whether it is in high-tech, life sciences or consumer goods, Israel is pioneering a business culture of entrepreneurship and innovation. Our goal is to get people to recognize Israel beyond just a distant place to support through donations and activism.

How do motivated college students in Ann Arbor research small cap technology firms in the Middle East?

EI: Thanks to research vehicles, companies and organizations on the ground in Israel that we have partnered with, the research will be easy and engaging for the students.  Additionally, the University of Michigan has a state of the art virtual investment lab with advanced research programs, which the executive board will be using during the educational phase and to assist in fund management.

Disclaimer: IsraelNewsletter is not affiliated with the TAMID Israel Investment Group and this interview should not be construed as an offer or a solicitation for TAMID.

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So today the Manufacturers Association of Israel is out calling on the government to implement some kind of emergency rescue program to save the fledgling textile industry. They say that due to the Shekel strength over the last year or so, exports have fallen and about 5% of workers in the industry have lost their jobs in ‘08.

According to a report in Globes: “While textile exports fell 3.3% to $520 million in the first half in real terms, compared with the corresponding period, textile imports (especially from Asia), rose 18.6% to $656 million.”

Unfortunately what they neglect to say is that this is nothing new. Israel has lost textile market share for years, as even local producers have turned to Jordan and other countries with much cheaper production costs. Basically, due to the fact that many in the Israeli textile industry are unionized, they have succeeded in pricing themselves out of the market, forcing companies to turn to cheaper alternatives. It’s the Association’s own fault and now they want the government, i.e taxpayers, to bail them out. Sorry. If you can survive, great. If not, try producing something else.

I realize that government bailouts of certain sectors and populations has become the norm over the last couple of months, as governments in both the UK and the US, have bailed out banks that played fast and loose with their and depositor’s money. And let’s not forget homeowners in the US who were encouraged to purchase homes that they couldn’t afford, couldn’t make monthly mortgage payments, and are now getting bailed out by Congress, the same Congress that encouraged them to make the purchase in the first place. But why can’t we just let the market take care of itself.

If developing countries are able to produce goods on the cheap, let them. Developed countries should concentrate on what they do best, which is producing value-added goods and services. Each country should specialize in what they do best, thus we will get the best goods at the most attractive prices. I am not going to go into an analysis of Francis Fukuyama’s “End of History’ theory, but specialization does have advantages.

The Israeli government should stand strong, and not succumb to a bailout of the textile industry. Either the Israel textile industry should make the necessary changes needed to compete in a global economy, or they should face the music.

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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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I’ve just begun writing about the New Rules but part of the thesis is that expert communities can and will play a bigger role in investment decisions and idea generations for savvy investors going forward.  We’ve only just begun, as has MarketGuru, a new site focused on providing New Rules-type functionality for a community of experts.  I had a chance recently to chat with the founder and CEO of MG, Gili Beiman.

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Can you tell us a bit about yourself?

Gili Beiman, Founder and CEO: I was the founder of the largest groups site in Israel, Tapuz, which we sold a few years back.  lived in the States for 3 years.  Like any good American, I opened an etrade account and 2 things stood out as problems in the whole data acquiring process, meaning trusted data and content that I could invest on:

1. too much information: There is a ton of information out there.   But if you don’t have a ranking system on all the content, I can’t really tell what to think – if I see a guy who’s writing a great blog on Apple, I have no idea whether he’s been right or wrong in his analysis.   There was no rational order or hierarchy in this information.
2. generic information: I find it interesting to know that the biggest source of financial content is via subscription newsletters, which is a $6.5 billion industry.  What an anomaly to think that all this content is generic, meaning newsletters are making recommendations to people they don’t know.  Your picks may be great but they can also be really risky — certainly not suitable for a retired school teacher.

So, where does MarketGuru come in? (Continue »)

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Umm, I thought we were supposed to believe that Merrill Lynch’s (MER) selling a part of its Bloomberg stake and by taking $40 billion of writedowns this year alone, investors were (almost?) out of the woods.

Guess again, news came overnight that Merrill will be selling more than $8 billion in new stock (read, diluting existing shareholders) at preferential terms to the Singaporean buyers of the last slug of stuck Merrill stuffed everyone with.

So, as Roger Ehrenberg asks, “…after all this, Is there more to come?”

Let’s get this straight:

CDO book:
Bloomberg reports that Merrill is selling its $30+ billion bond portfolio for 1/5 of face value.  I guess that’s better than 0.

New stock offering:
A lesson in dollar-cost averaging for Singapore’s Termasek.  Merrill is paying Temasek $2.5 billion to offset losses in Temasek’s previous investment in Merrill and to encourage the fund into putting $3.4 billion more into MER stock.

Bloomberg:
According to CEO Thain, Merrill is selling “a controlling stake [in Bloomberg], so we’ll sell more than 51%, but the exact percentage hasn’t been totally determined yet.”

What does that mean?  How much more than 51%?  Isn’t selling off that asset better than massively diluting shareholders after a year that has seen MER stock drop over 61%  Isn’t Bloomberg not even close to being core to what Merrill does anyway?

BlackRock:
Also, why are we holding on to this non-core asset?  Again, according to Thain, “BlackRock as we’ve always talked about is strategic to us. We in fact with the discussions with BlackRock have broadened and lengthened our distribution agreement with them and we continue to believe that that is a very good and important partnership for us and is working well with us.”  I guess what Merrill is saying is that it certainly helps to have a financial relationship with a buy-side firm to help with deal placement and uptake.  Not particulary inspiring and again, they’re smooshing the small investors.

The Bloomberg piece quoted above ends with a great quotation:

“Why these assets are written down when you’re selling them and weren’t written down in your earnings is a question,” said Ralph Cole, a senior vice president in research at Ferguson Wellman Capital Management Inc. in Portland, Oregon, which oversees $2.7 billion and doesn’t own Merrill shares. “This kind of announcement is surprising and a little disheartening.”

I may sound angry, but come on, guys.  I don’t even own the stock but this is the fourth share sale this year and all along, management has said that it has sufficient capital.  Not a great way to treat existing shareholders and certainly not enough to engender enough trust to lure new investors off the sidelines.

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