Taking Stock / First Half's Five Stars

Relativity and the markets

A moment on the market isn't like a moment of time anywhere else. You blink, your attention wanders for a microsecond - and whoops! Stocks shoot up, achieving five years of yields in a few months.

In the first half of the year, the Tel Aviv Stock Exchange proved again how hard it is to predict a market's behavior. Here's a look at the five glitziest stars on the marketplace of the first half of 2003, and what made them shine.

1. FIBI Holdings, parent company of the First International Bank of Israel, saw its stock power ahead by 110 percent. Was it because Zadik Bino bought control of the company? Or because its stock had been trading so low beforehand, which was the very factor that attracted Bino's bid, and induced the Safra banking brothers to sell the company?

Whatever the reason, it doesn't matter to Bino. Even before he had all the permits wrapped up, even before he'd replaced the bank's chairman, even before he'd twitched a finger, he was touted as the man who'd made the deal of the year.

From the day he signed the agreement, FIBI stock gained 50 percent. Not only that: The deal was denominated in dollars, so he also benefits from the 10 percent appreciation of the shekel.

2. Delek Automotive: Of all the leveraged businessmen crowding the arena, Yitzhak Tshuva seems to be the best situated. One reason is that the Delek Group (TASE: DLEKG) portfolio contains a prolific cash cow - Delek Automotive - which imports Mazda and Ford vehicles to Israel.

Of all the clever moves Tshuva has taken since buying Delek, leaving Gil Agmon in place as CEO by using the clunkiest golden handcuffs forged in Israel is the best.

The deepening recession, the climbing unemployment, and the collapse of corporate profits hammered car importers. But while imports crashed, Delek Automotive's sales, particularly of Mazda model 6 cars, soared. The company could well resume handing out fat dividends this year. Assuming it resumes the practice of sharing NIS 200 million with shareholders, that would bring its dividends since 1996 to about a billion shekels.

If Delek Automotive manages to sustain its cruising speed, it will be only a matter of time before Agmon, a monthly wage earner, turns into one of Israel's wealthier men. In recent years, he's bought NIS 100 million worth of Delek Automotive shares, and their market value has since doubled.

3. Agis Industries: In December 2001, the drug company's chairman, Mori Arkin, announced that 2002 would be a tough year for the company. It might even lose money, he warned.

Three months later, with Agis stock bottom-crawling, Arkin bought out his sister Daniela Yanai's shares.

Half a year later, the best period in the company's life began. After 10 years of stagnation, during which time Arkin was slammed for the chasm between the growth rate of fellow drugmakers Teva Pharmaceuticals and Taro Pharmaceutical Industries and that of his firm, Agis has taken off. It profits shot up and so did its stock, gaining 200 percent over two years, of which 95 percent was posted in the last year. Now Arkin has said goodbye to the company's CEO, Gil Bianco, and taken the company's management into his own hands.

4. Jonathan Kolber's back: He's keeping a low profile. He isn't granting interviews or saying much. But the way things look, Koor Industries is coming out of intensive care.

Makhteshim Agan Industries is flourishing, ECI Telecom has stopped deteriorating, and the sale of Koor's Elisra shares to the Israel Aircraft Industries (in a reverse move to privatization - this was, in essence, nationalization) removed the threat of bankruptcy and bettered the concern's asset portfolio.

The good news is that Koor shares have gained 80 percent since the start of the year. The bad news is that they need to gain another 500 percent before returning to the value at which Kolber and Charles Bronfman bought control of the company.

5. Ron Naftali, laughing last: 2003 is only half over, but the businessman of the year appears to be the chairman of Mayanot Eden (fondly known as Mei Eden).

Five years ago, Naftali decided to export Mayanot Eden's success to Europe. Most people snickered figuring that he would flop. The market quaked as the company's operations lost more and more money; even members of the company's board predicted failure.

Come April 2003, Naftali proved that the $170 million he'd invested in the European mineral water business was a good bet. The French food giant Danone decided to merge its bottled mineral water business with that of the Israeli company in Europe. Danone appraised Naftali's European subsidiary at 320 million euros, and undertook to buy a 20 percent stake in the Israeli parent company, Mayanot Eden, according to a company value of 400 million euros.

Mayanot Eden shares charged ahead by 80 percent in six months, lifting the company's market value to $200 million. And if Naftali makes good on the faith Danone's chairman, Frank Riboud, has evinced in him, that won't be the end of the story.