Israeli companies listed in the
U.S. are posting the biggest gains this quarter among the 100
largest Tel Aviv-traded stocks as increased takeovers and
improved profits mitigate global economic slowdown and
geopolitical concerns.
Mellanox Technologies Ltd. (MLNX) is leading the advance on the
Tel Aviv benchmark TA-100 Index with a 35 percent gain, after
forecasting 80 percent sales growth in the three months ended
Sept. 30. Fundtech Ltd. (FNDT) is up 25 percent in Tel Aviv after GTCR
Golder Rauner LLC offered to buy the company for a 33 percent
premium. Perrigo Co. (PRGO) rose to a record on Sept. 15 on plans to
release 45 new products in 2012, adding $190 million in sales.
While mounting concern about Europe’s debt crisis, the
Palestinian Authority’s quest for statehood and deteriorating
ties with Turkey and Egypt pushed the TA-100 Index to the lowest
level in two years last week, the Bloomberg Israel-US 25 Index
of the largest Israeli companies traded in New York gained 3.3
percent in the last five trading days. Mellanox, Fundtech and
Perrigo shares are listed on the Nasdaq Stock Market.
“Israel has a lot of U.S. listed companies that don’t have
a lot to do with the local economy,” said Michael Shaoul, whose
$704 million New York-based Marketfield Fund beat 92 percent of
peers during the past year, according to data compiled by
Bloomberg. “While economic activity is moderating, technology
is resilient. Most of these companies have been able to show
resilient earnings.”
Six of the seven TA-100 companies that are rising this
quarter are also listed in New York, according to data compiled
by Bloomberg.
Orders Persist
Mellanox, the 12-year-old Israeli adapter maker part-owned
by Oracle Corp., jumped 17 percent last week to $35.16. The Tel
Aviv shares advanced 20 percent to 133 shekels, or the
equivalent of $36.35.
Chief Executive Officer Eyal Waldman said in an interview
on Aug. 29 Mellanox is sticking with forecasts for 80 percent
sales growth this quarter as orders persist even as the global
recovery falters.
“We’re still going to be able to grow, as in these
situations people tend to look for products that do more with
less,” he said. “We still see the orders going in so we don’t
feel the macro waves coming.”
Fundtech, the Israeli provider of banking software for Bank
of America Corp. and HSBC Holdings Plc, surged 43 percent to
$23.18 in New York last week. The Tel Aviv shares advanced 42
percent to 84.38 shekels, or the equivalent of $23.
Premium
GTCR, a Chicago-based private-equity firm, will pay $23.33
in cash for Fundtech shares, higher than the $17.56 closing
price on Sept. 14, and will combine the company with BankServ,
which operates in the same sector.
“Most Israeli companies that I’ve talked to are not
concerned about geopolitical events in Israel because their
operations and their customers are all over the world,” said
Jamia Jasper, president of AmerIsrael Capital Management LLC in
New York.
Perrigo, the Allegan, Michigan-based company that bought
B’nei Brak, Israel-based Agis Industries Ltd. in 2005, rose 6
percent in New York last week to $96.35. The maker of over-the-
counter drugs and infant formulas advanced 1.8 percent to 344.60
shekels in Tel Aviv, or the equivalent of $94.2.
EZchip Semiconductor Ltd. (EZCH) surged 19 percent to $34.87 in
New York last week on speculation Marvell Technology Group Ltd.
will buy the Israeli maker of network processors to stave off
growing competition. The Tel Aviv shares added 19 percent last
week to 133.90 shekels, or the equivalent of $36.6.
Diversification
Ness Technologies Inc. (NSTC), the information technology-services
provider, said on Aug. 30 that its board approved the sale of
the company to Citi Venture Capital International for $7.75 a
share. Shares rose to a record on Sept. 7.
“For the most part, those are the ones that have revenue
stream that are less dependent on the Israeli market per se and
are better diversified,” said Chaim Fromowitz, the head of the
private banking division at New York-based Bank Leumi USA, a
unit of Israel’s largest lender by assets. Local companies “are
being discounted because of the geopolitical events,” he said.
The TA-100 Index has lost 22 percent this year, or 25
percent in dollar terms, while the Bloomberg Israel-US 25 Index
has dropped 20 percent during the same period. The shekel has
weakened 3.8 percent against the dollar this year, the fourth-
worst performer among 10 emerging-market currencies in Europe,
Middle East and Africa.
Turkey, Egypt
Declines swelled after Turkish Prime Minister Recep Tayyip Erdogan expelled the Israeli ambassador and halted defense
purchases, protesters attacked the Israeli embassy in Cairo and
as the Palestinians are expected to present their application
for full membership at the UN General Assembly meeting in New
York Sept. 23.
Israel last week posted its first quarterly current-account
deficit since 2008, as export growth eased amid an economic
slowdown in the U.S. and Europe, the country’s main export
markets.
Elbit Imaging Ltd. (EMIT), the investor in real estate and medical
companies, sank 61 percent this quarter, leading declines in the
index. Koor Industries Ltd. (KOR), the holding company controlled by
Israeli billionaire Nochi Dankner, dropped 47 percent.
Israeli technology companies raised $569 million in capital
during the second quarter of 2011, the most in two years and up
from $343 million in the same period last year, according to the
Israel Venture Capital-KPMG Quarterly Survey released July 13.
Israel’s stock market was upgraded to developed market
status by MSCI Inc. in May 2010, the same month the 63-year-old
country was accepted to the Organization for Economic
Cooperation and Development.
Syneron Gains
Israel, whose population of 7.7 million is similar to
Switzerland’s, has 57 companies listed on Nasdaq, the most
traded companies of any country outside the U.S. after China.
Syneron Medical Ltd. (ELOS), the Israeli maker of medical products
whose biggest shareholder is Seth Klarman’s Baupost Group LLC,
climbed 3.7 percent to $10.56 on Sept. 16, the highest level
since Aug. 17.
Palomar Medical Technologies Inc. (PMTI), a maker of cosmetic
lasers, said it will receive $31 million plus royalties from
Syneron in a settlement of their patent-infringement dispute
over hair-removal systems.
Syneron and its Candela unit will get a license to Palomar
technology for professional hair-removal systems, and will pay
royalties for home-use products, the companies said on Sept. 16
in a statement. Palomar will also get a license to some Syneron
patents.
“We recommend that investors buy shares of both Palomar
Medical and Syneron Medical following the announced
settlement,” Anthony Vendetti, an analyst at Maxim Group LLC in
New York, wrote in an e-mailed report today. “The settlement
removes the legal uncertainty that has been an overhang on
shares of both companies.”
To contact the reporter on this story:
Tal Barak Harif in New York at
tbarak@bloomberg.net
To contact the editor responsible for this story:
David Papadopoulos at
papadopoulos@bloomberg.net