Dankner sees crisis continuing but buys back stock in IDB group companies

Nochi Dankner, one of Israel's most powerful tycoons, evidently believes that the series of upheavals in the world markets is far from over. Put otherwise, he thinks that asset prices will drop some more but meanwhile, he's buying back shares in his own business group, IDB.

Dankner isn't the only one who believes the trouble will worsen. But he was proven right when he predicted back at the start of 2007 that the world was at the brink of economic crisis that would probably last more than a year. Within six months, the world had crossed that threshold.

Before the markets began to retreat in mid-2007, the IDB group companies had raised billions of shekels by selling long-term bonds that bore low interest rates, in keeping with the debt's blue-chip status. But the IDB managers seem to be exercising great caution when it comes to using that cash to make new acquisitions, evidently guided by the premise that prices have room to fall further. Indeed, Dankner bought the controlling interest in IDB itself in 2003, at the height of a recession.

Throughout 2007, the major IDB group companies - IDB Holding Corporation, IDB Development Corporation, Discount Investment Corporation - made no major investments with one elephantine exception. Dankner joined forces with property developer Yitzhak Tshuva in a Las Vegas casino-resort project that is expected to cost $6 billion to $8 billion. It is going up in the stead of the Pioneer hotel and casino, which has been demolished.

That said, it seems that given the present low level of interest rates, Dankner has found a home for at least some of the billions that IDB group companies raised - in their own shares, which had plunged by double-digit percent since the troubles began: not only the giant holding companies but subsidiaries, too, such as Koor Industries, Clal Insurance and Makhteshim Agan. Two weeks ago IDB repurchased NIS 200 million worth of Discount Investment stock, after buying back huge amounts of Makhteshim Agan stock. Dankner hasn't yet repurchased any stock in Property & Building, though it's down 43% from its peak.

Dankner recently tried to sell the controlling interest in the engineering company Ham-Let (Israel-Canada), but changed his mind after failing to get the price he hoped for.