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.

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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Aaron Katsman
IsraelNewsletter.com

Morgan Stanley (MS) just announced changes made to their MSCI Israel index. Among the changes was lowering weightings in hi-tech and insurance. Ok, nothing very unusual. They raised the index weighting on the banking sector. Again, nothing to write home about. It’s only when you look at the individual stock weightings that you may want to scratch your head. Teva Pharmaceuticals (TEVA) has a staggering 44.8% index weighting. My question to the folks at MSCI is, what’s the point? Why bother having an index which is essentially one company? After all Teva is about 9.5% of the local Tel-Aviv index.

For ETF investors this rebalance is important. Investors who have either purchased or are thinking about purchasing the iShares MSCI Israel index (EIS) had better be warned. They are in essence just buying Teva. They are certainly not getting any meaningful type of linkage to the local Israeli index. For investors looking for more diversified exposure, you may want to check out the new NETS TA 25 index fund (TAV) . In fact, fellow IOI colleague Zack “Billy Squier was underrated” Miller, had a real must-read, in-depth analysis of the differences in the 2 ETFs.

MSCI is often criticized for the same reason. They take the largest position in a particular index, and make it a very large chunk of the index they are trying to create. What’s the point? Shouldn’t a market index be a bit broader?

6/10/2008: An update on this post can be found here.

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

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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Aaron Katsman
IsraelNewsletter.com

A few weeks ago, Zack Miller and myself were interviewed by CNBC’s Squawk Box. The purpose of the interview was to discuss Israel’s accomplishments over the past 60 years. During the interview, we focused on Israeli companies that are publicly traded in the United States, as well as up-and-coming technologies that could potentially make a global impact over the next two to four years.

Investment Destination
Over the last four years, Israel has become a very popular destination for foreign investors. Global giants like General Electric, Microsoft, IBM and Johnson and Johnson are only a few of the companies that have made large investments in Israel by buying local companies. In fact, Warren Buffet, perhaps the world’s most famous and successful investor, made his largest non-U.S. investment when he purchased Iscar, an Israeli company, for $4.4 billion. Buffett has since referred to the purchase as a “dream investment.” (Continue »)

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Aaron Katsman
www.IsraelNewsletter.com

Shares in networking chip vendor Marvell Technology (MRVL) are surging on the back of a very strong earnings report. As reported by Tiernan Ray: “sales rose 27% year-over-year to $804 million in its fiscal first quarter ending May 3, beating an average estimate of $784 million. The company’s net income per diluted share of 24 cents, excluding some costs, was almost five times as high as the year-earlier period, and well ahead of estimates of 13 cents per share. Including costs for stock-based-compensation, among other things, profit was 11 cents a share. The company cited stronger than expected sales of “802.11N” wireless router chips, chips for networked disk drives, and printer chips among the sources of higher-than-expected revenue in the quarter. Cost-cutting initiatives helped Marvell boost its gross profit as a percentage of sales to 52%, above the company’s 50% target.”

As colleague Zack Miller posted in December, ” It’s definitely a stock with hair on it. But after taking a recent haircut, it may be an interesting, albeit drawn-out, play.”

How right he was. Giddy Up. It seems that the company’s ambitous turnaround plan has taken hold and we are starting to see the results. Improving margins, the aforementioned launch of the 3G Blackberry, new products and cost cutting all could possibly help the stock get back on track.

As IOI wrote a few months ago, the fact that the former hi-flyer came crahsing down to earth, potentially made for an attractive entry point for the stock. I don’t want to toot our own horn, but with Miller’s Decemeber call and our February post, it’s nice to be right once in a while!

If you are a long-term investor, looking to find a battered tech name that has the potential to make a turnaround, do some research on Marvell.

Disclosure: Author’s fund holds a position in MRVL. He has no position in any other stock mentioned as of 5/30/08.

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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