The Israeli trade deficit continued to widen in June as a strong Shekel and the cost of fuel imports rose more than the growth in exports. As reported in the Jpost, “The deficit, excluding diamonds, ships and aircraft, increased to a seasonally adjusted $1.27 billion from $1.04b. a year ago, the Central Bureau of Statistics said in a preliminary report Sunday.” I have never thought trade balances mean a whole lot. So what if you run a trade deficit? As colleague Zack ‘check out our new website redesign‘ Miller said to me over a cup of coffee, ” Isn’t it obvious that Israel will become a net importer, as the country becomes wealthier?” Giddy up!

Microsoft (MSFT) is at it again. The Redmond based software giant has agreed to purchase another Israeli company. This time it’s data quality start-up Zoomix. According to unnamed sources in Globes, purchase price is between $20-30 million. Hey Softie, can you spare a million or two?

Hey, anyone know what’s going on at Fundtech (FNDT)? The stock has surged over the last month by more than 15% on heavy volume, in the face of strong headwinds provided by the general market. Fundtech, which provides financial transaction processing software solutions for financial institutions all over the world, has managed to continue to sign deals even as IT spending in the financial sector remains sluggish.

Part of the puzzle as to the dramatic fall in shares of BluePhoenix (BPHX) has been revealed (aside from declining revenues, foggy outlook…). It turns out that US investment group Gilder Gagnon Howe & Co. sold off most of their holdings in the company. Globes reports that according to SEC filings, GGHC held 354,000 BluePhoenix shares at the end of June down from more than 2.2 million shares held at the end of Q1 ‘08. That’s a huge amount of stock hitting the market for such a thinly traded share.

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in FNDT, BPHX. He has no position in any other stock mentioned as of 7/14/08.

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

Shares in Medis Technologies (MDTL) reached a 5 year low Friday on news that the company was doing a $29 million offering. This raise leads to the question of whether the company is teetering on the brink of financial solvency? For those who don’t know, Medis focuses on its fuel cell technology, and sells through OEM partnerships.

The problem is that they aren’t doing much selling. The company has made announcement’s in the past about prospective deals but little has come to fruition. A year ago, after announcing a deal with Microsoft (MSFT) that was said to be in the millions, Herb Greenberg wrote in SeekingAlpha.com: “A Microsoft spokesman, noting that the order was “small,” told me there has been “inaccurate” information in the marketplace about what Microsoft plans to do with the fuel cells. “We have no plans to resell these products around the world,” she said. She added that Microsoft has no plans “for development of the product.”

Then what is Microsoft doing with it? As John says in his piece, Microsoft plans to use the Medis products as a giveaway at an upcoming event…like a chatchke. Yet another Medis announcement that isn’t quite what it appears to be.

Jonathan Weil of Glass Lewis, the proxy and research firm, added color in a report to his firm’s clients. He quoted a Microsoft spokesman as saying the Medis product is “not a Microsoft branded product. He added that the total purchase price was “less than $15,000. We have no agreements with them. No joint development. There’s no partnership around accessories. If you think of this as akin to Microsoft buying a pen or a Frisbee — that’s the way you should think of it.”

If you look at their Q1 ‘08 earnings report you will find that the company lost more than $14.7 million in the quarter. The report goes on to say: “We recently announced the signing of a $60 million equity line of credit facility with Azimuth Opportunity Ltd. We believe that the equity line offers financing which is sufficient to meet our current and near term foreseeable needs but is also very flexible. As we move forward with our sales and marketing programs we will determine how best to finance our activities.”

That was on May 12th. A short time after signing a $60 million equity line of credit, the company goes out and raises $29 million? I know that when talking about an alternative energy company this may sound heretical, but it seems like Medis is about to run out of gas.

Disclosure: Author’s fund has no position in any stock mentioned as of 6/22/08.

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

If “Initiative 97″ makes it on the ballot in the fall, citizens of Seattle will be asked to approve a measure that would prohibit the city from investing its pension funds in corporations that benefit from the Iraq war, or companies that provide material support to the Israeli government within the so-called “occupied territories.” The opposition to the initiative is being led by StandWithUs.org. It strikes me as a bit odd that a measure that seems to be intended to protest the U.S. Iraq policy also includes divestment from Israel.

Why the connection?

(Continue »)

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