Delek Shares Tumble on Report That Israel-Turkey Gas-export Deal Is in Jeopardy

Business in Brief: ION Asset Management posted top returns among Israeli hedge funds in 2017 ■ Elsztain formally submits bid for Eurocom after antitrust agency issues clarifications ■ Wall Street continues to cast pall over Tel Aviv shares

FILE PHOTO: An Israeli gas platform is seen in the Mediterranean Sea
\ AMIR COHEN/ REUTERS

ION Asset Management posted top returns among Israeli hedge funds in 2017

ION Asset Management, led by former UBS bankers Jonathan Half and Stephen Levey, was the top Israeli hedge fund last year, according to figures obtained by TheMarker. ION generated a 24% return for investors, four times the gain for the Tel Aviv Stock Exchange’s TA-125 index. A long/short equity hedge fund focused on Israeli and Israeli-related equities, ION has about $750 million under management. Last year was a good one for Israeli hedge funds: TGI, an index of their performance, showed a 10.2% rise for 65 funds, up from 8% in 2016 for 49 funds. Compared to the S&P 500’s 21.8% advance last year (including dividend payments), Israeli hedge funds didn’t do well at all but compared to the HFRX global hedge fund index’s 6% increase Israelis were star performers. Assets managed by Israeli hedge funds reached 17.5 billion shekels ($5.1 billion) at the end of 2017, up from 8 billion shekels at the end of 2013. (Eran Azran)

Delek shares tumble on report that Turkish gas-export deal is in jeopardy

Shares of Yitzhak Tshuva’s Delek Group tumbled Monday after Bloomberg News reported that plans to develop an undersea pipeline to deliver Israeli natural gas to Turkey looked increasingly troubled amid fraying bilateral relations. Israel has shifted its priorities to exporting to Egypt and Europe, markets with their own political problems or high costs, Bloomberg said, citing two unnamed sources. Turkish pipeline company Botas canceled a December visit to Israel, Bloomberg said. None of the companies involved would comment. In another setback for Delek, Moody’s lowered the outlook for the B3-rated debt held by Ithaca, Delek’s wholly owned North Sea energy company, to Negative. Moody’s said it was concerned about the low output rate at Ithaca’s Stella field, the cash flow from which is supposed to help repay the company’s $750 million in debt and reduce its leveraging. Shares of Delek, which owns 45.3% of Israel’s giant Leviathan gas field, finished down 7.45% at 542 shekels ($156.97). (Eran Azran)

Elsztain formally submits bid for Eurocom after antitrust agency issues clarifications

Eduardo Elsztain on Monday formally joined the race for control of Bezeq through his Discount Investment Corporation a day after learning the conditions antitrust regulators will put on the bid. Elsztain thus become the third bidder for Eurocom Communications, the holding company that controls Bezeq in need of a debt bailout. In line with the Antitrust Authority’s conditions, Discount said it would initially buy stakes in two smaller Eurocom assets —15.3% of solar-energy company Enlight and 37.5% of the Midtown apartment tower in Tel Aviv — for a combined 300 million shekels ($86.9 million). The actual takeover of Eurocom would occur about six months after the terms of a debt deal have been finalized and after Discount divests its 45% stake in Cellcom Israel, a mobile operator that competes with Bezeq, Discount said. Discount would then inject 700 million shekels into Eurocom via a placement of convertible bonds. Discount shares ended down 0.7% at 13.40 shekels. (Michael Rochvarger)

Starboard questions why directors of Mellanox have sold so much stock

Starboard Value, the U.S. activist investor pressing for changes at Israeli chipmaker Mellanox, renewed its broadside Monday, saying it was troubled that directors had sold so much of their stock over the years. Starboard, which has amassed a 10.7% stake in Mellanox and has proposed an alternative slate of directors to shareholders, said directors had sold $130 million in stock in 370 sales since 2007. “While we appreciate the need and desire for company officers to sell some stock over time, the frequency and magnitude of insider selling at Mellanox is staggering and among the most one-sided we have ever seen,” Starboard’s Peter Feld wrote in a letter to Mellanox Chairman Irwin Federman. “It raises serious questions as to both the level of commitment that the board has to the company and the level of confidence the board has in management’s operating plan.” Mellanox shares were up 0.2% at $63.80 mid-day local time in New York. (TheMarker)

Wall Street continues to cast pall over Tel Aviv shares

Tel Aviv shares ended lower again Monday in response to the downturn on Wall Street, although the declines were more moderate than on Sunday. The benchmark TA-35 index shed 0.5% to end at 1,505.81 points, while the TA-125 dropped 0.7% to 1,366.85, on turnover of 1.87 billion shekels ($540 million). U.S. stocks opened sharply lower Monday as rising bond yields continued to fuel an equities sell-off and hints of inflation pickup triggered concerns that interest rates may rise more quickly than previously expected. In Tel Aviv, bank stocks escaped the otherwise broad decline. Volume leaders Bank Leumi ended 2.2% higher at 21.25 shekels and Bank Hapoalim added 1.8% to 25.65. IDI Insurance declined 6% to 228.50 after Raviv Zoller said he was quitting as CEO after 10 years. Bezeq dropped 3.9% to 5.22 and its parent company, B Communications, fell 6.15% to 60.60. Frutarom declined 3.85% to 335.10. (Guy Erez)