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Tao Tsuot (TASE: TAO) last week reported netting NIS 41 million for the second quarter of 2006. If stock options costs are deducted, then its profit was NIS 50 million for the quarter, which is not bad for a company that doesn't do anything, other than run the underwriting company Gilon Investments, which started just a month and a half ago. But is has holdings.

Tao Tsuot manager Yossi Arad explains that 20% of the profit derived from its holdings in Nochi Dankner's mega-holding company IDB Holding Corporation (TASE: IDBH). The giant dividends that the IDB group companies distribute didn't hurt either.

Arad says that about NIS 7 million to NIS 8 million derived from Scailex (formerly known as Scitex), in which Tao owns an 8.5% interest.

Tau is owned by Ilan Ben-Dov, who also owns another company, Samsung cellphone importer Suny Electronic (TASE: SUNY). Together Tao and Suny own 20% of Scailex. Ben-Dov chairs Tao.

Intense activity in derivatives was also a source of handsome profit for Tao in the second quarter.

During the quarter, Ben-Dov and CEO Yossi Arad waited 11.4 million stock options they had received as part of their employment terms. Arab explained that they decided to spare the company the onerous costs. Even so the company had to post a one-time charge of NIS 8.2 million, if not for which profit would have reached NIS 50 million.

Aside from shares in IDB, Tao also owns interests in Israel Land Development Corporation (TASE: ILDC) (19.82%), and other companies. It takes no part in management, nor does it mean to. 

Arad says the Tao management believes ILDC, which is controlled by the Nimrodi  family, is worth triple its present market value, which is about NIS 450 million.