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One can understand why shares in FMS Enterprises Migun (TASE: FMS) tumbled 20% on gigantic turnover today. Investors pounced to punish the armoring maker, which is considered to be one of the least transparent on the TA-100 index, for its awful second-quarter financial statement and an especially unappetizing unrelated announcement.

But the main victim of the punishment that the market meted out today is the little man, small investors who had become enamored of FMS.

The latest developments at FMS beg two questions, if not more. One: Why did Daniel Blum, the company's controlling shareholder, sell NIS 60 million worth of FMS shares a month and a half ago, just after the second quarter of 2006 ended? He sold his shares via Leader & Co to institutional investors who are now licking their wounds.

Question two: How much egg is there on analysts' faces, after Israel Brokerage & Investments had recommended investment in the stock just two weeks ago?

Like companies that want to deflect attention from bad news, and in contrast to its custom of being among the first companies to publish financial statements, this time FMS released its second-quarter report late on Thursday, after trading had closed on the Tel Aviv Stock Exchange for the day.

The company admitted that its net profit had plummeted to just NIS 9 million in the quarter, compared with NIS 29 million in the same period of 2005. Revenues also sank.

But the real drama was the revelation of delays in an NIS 70 million a year order from the American army.

Did Blum know, 20 days after the end of the second quarter (which had proved to be a particularly weak one), just how badly FMS had done in the quarter? Did he know that the American army had rejected the sample bullet-proof vests that FMS had provided? How do the institutional clients of Leader & Co feel after buying the share for NIS 197 and watching it fall to NIS 150?

In the July issue of TheMarker Magazine, ten analysts were asked for their ten favorite stock picks.

Ravit Volkovitch of Psagot Ofek had advised investors to hold a position in FMS ahead of its second-quarter results. Moshe Ravinian of Excellence-Nessuah wrote that the establishment of FMS' plant in the U.S. was backed by three years of orders. Leader & Co we have already mentioned.

One wonders if the analysts met with the FMS management. Probably not, as the FMS management scorns meetings with analysts, and talking with the press. That could be one of the reasons behind the dive in the share price today: the glaring absence of information.

At the opening of Tel Aviv trade today, the turnover in FMS, not one the usual stars on the floor, comprised 40% of total trade. Turnover in FMS was greater than in the mighty Teva or in any of the banks, by a huge margin. And that begs another question. Why had FMS remained so popular as storm clouds gathered over its head? Investment managers and analysts covering the company had apparently hoped that FMS would keep galloping ahead as it had for five years, lifting its share price by 1900% to a market capitalization of NIS 1.8 billion. But they hoped in vain.

sharon.shpurer@themarker.com