Taking Stock / What Makes Tshuva Tick

Nothing at all happened to Dankner Investment stock when Gmul Investment Company announced negotiations to buy the controlling interest in the Dankner family firm. Not a twitch. Investors were unmoved.

But when Yitzhak Tshuva's Delek Group revealed that it would be buying Dankner Investment instead, the market went wild. Dankner Investment stock leaped 35 percent in two trading days.

Even more surprising: When a company announces it's buying another company, its stock usually dips. Not in this case. Delek Group rose 1.5 percent on Monday, lifting its market cap to $808 million.

The value Tshuva's empire has achieved begs comparison of the man with Israel's other tycoons, mainly Nochi Dankner, who took over IDB Holding Corporation a year ago. Analysts are, by and large, in a state of shock. Delek is now worth more than IDB, which is trading at a lowly market value of $653 million.

But the difference between Tshuva and Dankner comes to much more than a $155 million gap. Technically, Dankner may wield more influence in the marketplace, because IDB has a finger in 150 corporate pies through endless links of holdings. But Dankner himself is also a tycoon by virtue of endless chains, through which he holds just 12 percent of IDB.

Tshuva, on the other hand, directly owns 84 percent of Delek Investments. Yes, he, himself and him, alone, without partners, without coalitions, without being beholden to a cluster of people who he has to heed, at best, or give jobs to, at worst. A solo act.

Tshuva's large holding in Delek leaves him free to take advantage of the surge on the capital market and cash out some of his stock. And here, on Tuesday, he sold a 1.9 percent stake in Delek for NIS 83 million, while still retaining firm control.

How did Tshuva advance from being a practically unknown builder in Netanya, just 10 years ago, to becoming one of the richest and most powerful men in Israel's business scene? Who is this man who cuts a check, buys out the Dankners and saves them from the abyss? How did he do it?

l Buying in the dips - A lot of analyses of businesses and managers fail to factor in a very simple thing - the starting point. Mainly with the help of Bank Hapoalim (TASE: POLI ) manager Shlomo Nehama, Tshuva managed to buy Dankner Investment at a low price. When you get a good price, your chance of success grows significantly. When you buy at a bad price, you become tempted to do rash things to make the deal look good, and waste time trying to justify the mistake you made.

l Gil Agmon - Tshuva has scored many a coup since acquiring Delek, but the best value of all has been created by Delek Automotive, importer of Mazda and Ford. And one of the first things Tshuva did when buying Delek was to clamp very, very heavy shiny gold shackles on the wrists and ankles of the manager of Delek Automotive, Gil Agmon.

It took Tshuva little time to figure out what a gem he had in Agmon, who was promptly given a package of shares and options that few tycoons would lavish on a mere hiree. Within five years, Tshuva's package had turned Agmon into a multimillionaire, a major one, with personal wealth of a quarter-billion shekels or so. But Tshuva, who has received a billion shekels in dividends from Delek Automotive, has no cause to cavil.

l Charisma - Yitzhak Tshuva is not some kind of financial mastermind, nor does he expound his mores. He isn't a master of marketing. If anything, sometimes he sounds rather indistinct. Tshuva says of himself that his vocabulary is limited.

But sometimes weaknesses can turn to one's advantage, apparently. Tshuva's modest style has created him very few enemies in the business sector and in the corridors of government, enabling him to run his business in relative peace. That is a good thing.

Just look at the fur flying in recent months between Yossi Maiman and National Infrastructure Minister Joseph Paritzky over the deal for EMG, in which Maiman has a stake, to sell natural gas to the Israel Electric Corporation. While they exchange invective, the Tethys Sea partnership, in which Tshuva is involved via Delek Drilling, quietly closed a multi-billion shekel deal with the IEC. No fuss, no media muss and the company and Tshuva got exactly what they wanted.

l Timing - This is even more important than the previous three points. When Tshuva bought Delek, he didn't know that within a year, Delek Drilling's offshore exploration would score one of the biggest finds of natural gas in Israeli history.

Over the last decade, Tshuva has personally invested hundreds of millions of dollars in real estate in the United States and Canada. He has already cashed in some for handsome capital gains. Luck or timing? Napoleon famously said that he wants lucky generals. Whatever the case, Tshuva was certainly at the right place at the right time.

l Solo act - The main difference between Tshuva and the rest of Israel's tycoons is that he doesn't surround himself with hordes of VPs, analysts and economists. He doesn't hold mammoth management conferences or endless debates with steering committees. He doesn't avail himself of McKinsey or other leading strategy consultancies, unlike the rest of the prosperous pack, who seem to feel the need for a thick tome in English before inking a deal.

Tshuva closes most of his deals in personal meetings, without advisers. He cuts his deals alone, based on his own intuition, and he knows how to cut his losses, too.

Tshuva lost a quarter-billion shekels on venture capital, which he got into at the worst possible time, buying a series of venture capital funds during the bubble years. A year after the bubble burst, he accepted his mistake, admitted he knew nothing about high-tech and began divesting the investments. Other tycoons who made similar mistakes in judgment are still loudly explaining just why their bubble-plagued investments had been wise all along and why they'll work out in the end. Not Tshuva.

All that goes for Tshuva's last seven years. There's no telling whether his qualities will lead him to advance further. Buying Dankner Investment renders his concern more diversified and leveraged. He may yet need a whole other set of skills to maintain his status as one of the most colorful legends that Israel's business scene has ever seen.