Aaron Katsman
IsraelNewsletter.com

Amazing how your financial situation can improve if you save $5,000 an hour by being faithful to your wife. Apparently, shamed former New York Governor Eliot Spitzer is flush with cash as he contemplates opening up a real estate fund focused on distressed property.

According to a report in the NY Sun: ” Late last month, the former governor of New York gathered a group of high-level Washington, D.C.-based labor union officials in a conference room at the headquarters of his father’s real estate business in Manhattan and pitched them his idea for starting such a fund.”

The report continues, “Distressed real estate funds — also known as “vulture” or, more euphemistically, “opportunity” funds — typically promise returns of more than 20% and are active in Florida, Nevada, and Southern California. They rely heavily on pension and university endowment investments. Mr. Spitzer is said to be envisioning projects valued between $100 million and $500 million.”

Instead of distressed property, Spitzer should focus on some distressed or beaten down Israeli stocks that trade in the US. After all, $5,000 can’t buy you an office building, but it can buy you 500 shares of a $10 stock. Just think, he could have a million dollar stock portfolio if he just remains faithful.

Here are 2 stocks that should draw the attention of Spitzer:

Tefron (TFR), a textile company that manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria’s Secret, Nike (NKE), Target (TGT), and The Gap (GPS), has been crushed over the last year. The stock is down more than 70% over that time, on successive lackluster earnings reports, as well as a very weak US dollar. The company does see nice growth in their active-wear lines, so at $2.83 a share it maybe worth taking a look at. Eliot, 2 words: Lingerie and Victoria’s Secret.

Nice Systems (NICE), develops, markets, and supports integrated, scalable multimedia digital recording platforms, enhanced software applications, operational risk management software solutions, and related professional services is one of our favorites at IOI. With the stock down about 17% over the last year, investors looking for a strong growth Israeli tech play may want to potentially take a look. For Spitzer the stock must have special meaning. You see, Nice also works tracking money flows. Though not confirmed, many believe that’s a Nice product was used to track the unusual money flows that ultimately were used to break the Spitzer case. Eliot, why not try and profit from those who did you in?

Not that I have a bias towards either stock but I have a hunch that if Spitzer had to choose just one stock, I know which stock he would invest in.

According to the aforementioned article: “Mr. Spitzer works out of the Crown Building at 730 Fifth Ave., a 26-story structure his father and two other real estate investors bought in 1991 (in what turned out to be a highly lucrative investment). Playboy Enterprises leases commercial space in the building.”

Looks like Tefron it is!

Disclosure: Author’s fund has a position in Nice. He has no position in any other stock mentioned as of 6/12/08.

Please see our Disclaimer HERE.

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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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By Aaron Katsman
IsraelNewsletter.com

Tefron,(TFR), a textile company that manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria’s Secret, Nike (NKE), Target (TGT), and The Gap (GPS), has seen its’ stock fly over the last week surging over 18%. The surge is coming on no news, but it would make sense that simply the heavy selling of late was way overdone, and a bit of rationality has taken over. Or could it be that Iranian President Ahmadinejad, actually paid attention to our blog and started buying up Tefron stock. 

As I mentioned previously CEO Yos Shiran was optimistic for Q4 and all of ‘08, and thought that the worst was behind the company. I would expect to see continued upside in Tefron stock.

Please see our Disclaimer HERE.

Disclosure: Author’s fund is long TFR as of 10/11/07. Author has no positions in any other companies mentioned.

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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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Tefron (TFR) is a neat, little textile company that manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers like Victoria’s Secret, Nike (NKE), Target (TGT), The Gap (GPS) and others.

The company makes some high-end seamless sports apparel that’s being adopted at the level of the MLB, NFL, NBA, NCAA, ATP, World Cup Soccer, as well as by local and international Rugby, Running, Rowing, Softball, and Tennis clubs.

Yet, not all is bliss at Tefron.

They reported today after issuing a profit warning about a month ago and things don’t look great.

As we’ve written previously, Tefron has been having a rough time of it. In Tefron: Sexy Lingerie, Ugly Financials, we’ve explained that a part of Tefron’s woes stem from a Victoria’s Secret product line that we learn is ultimately being outsourced to India. Although the company says that this move won’t have a material impact on 2008, what’s going on here is a general product transition in the company.

The company is maturing its technology and sales towards servicing the high-end sports market. Companies like Under Armour (UA), Columbia Sportswear (COLM). Adidas (ADDYY.PK) and Nike (NKE) are all positioning to service professional league-level equipment and the much larger market behind it: sports fans. My son wears a Michael Vick (God help us) Nike Jersey to bed every night and is infrequently seen without his David Beckham jersey, now of the Los Angeles Galaxy.

Yosef Shiran, the CEO of Tefron, has to say this about what’s going on:

“However, given our expectations for improved active-wear sales in the fourth quarter mainly due to positive indications received from Nike for increased ‘next generation’ product orders, and a seasonally stronger quarter for swimwear sales, we expect a strong improvement in sales and margins in the fourth quarter compared to the second quarter of 2007.”

Tefron is migrating its business from lower margins, declining sales to an upper-end product aimed at athletes. Nike has made a mint out of this market over the past 20 years and Under Armour has seemingly come out of nowhere to become a $3 billion player.

I still own (and wear!) my Patagonia pullover I wore to beer parties at Dartmouth in my college days. Tefron needs to execute now on its product transition towards high-end sports apparel to lock in the athletic market to be able to sell to my kids when they enter school.

With the growing international worship of professional athletes, that’s the market I’d want to blow out.

Disclosure: Author’s fund is long TFR as of 8/9/07 and doesn’t hold any of the other stocks mentioned in this article.

Please see our Disclaimer HERE.

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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

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