In spite of premonitions and anticipation that 2001 would be a poor year for high-tech, we formed a new model
portfolio on January 2, 2001 and named it the Israel High-Tech Model Millennium Portfolio. As of December 12 the
portfolio had lost 38.3 % of its value while the NASDAQ 100, a benchmark index of the top US high-tech
companies is down by 29%.
When we recently attended the "Go 4 Europe" held in Tel-Aviv we heard from Mr. Yair Shamir, Chairman of Catalyst
Investments LP, one of the organizers of the conference, that shares of companies traded on the European Stock
Exchanges had lost about 24% of their value, while the shares of Israeli companies traded on these markets had
fallen by 47%. Both Mr. Shamir and one other speaker, blamed Europeans' sensitivity to the political situation as
being the key factor in the apparent downside discount accorded to Israeli companies. However, Frances
Bornstein, Vice KPresident and Deputy Head of the SWX New Market disagrees. She points out " that the Swiss
market looks for quality" and that the European markets are not as sensitive to the Israeli political scene as had
been suggested by panelists at the conference. CardGard and Shahal, two quality Israeli companies floated and
traded on the Swiss Exchanges, have not fared too well this year. Shahal held a successful IPO a year ago, and
its shares rose 22% on the first day of trading.
Overall this year the Shahal shares are down by more than 50%. Card Gard, a premium and highly profitable Israeli
company, in spite of the price of its shares establishing a record performance in 2000 . However, in the first year
after its IPO the shares are down by nearly 40% in 2001. Irregardless of the basic issues of maintaining an Israeli
registration, the fact is that Card Gard announced a decision to move its home from Israel to Switzerland. This
also says a lot about what perceptions managements wish to project to the investment world.
Since Israeli shares, have been excessively pressured lower, whether due to negative European sentiment or
apathy towards high-tech, it may be a good idea to re examine the Israeli shares as prospects for a major
rebound, as world markets recover. The current positive change in European attitudes towards Israel can also
add to their investment appeal.
Currently 32 Israeli companies that have raised capital on European markets have their shares traded on these
European Stock Exchanges. With the exception of four, these companies fall into the category of being high
technology, or high technology related.
Edouard Cukierman, founder of the investment banking firm Cukierman & Co., is a major booster of opportunities
for Israeli companies in Europe. Characteristically, he named the recent conference: "Go 4 Europe" .
Cukierman & Co and the Catalyst Investment LP, have been responsible, more than any other Israeli venture
capital group, for bringing Israeli companies to Europe. The field is wide open they claim, but it will undoubtedly
take years before the level of European listings begin to catch up with the number of Israeli Companies on Wall
Street, now exceeding 125. The performance of Israeli companies on global markets, in the past has resulted in
investor returns that exceeded benchmark indices both on the up-and-down side. Our own Israel High-Tech
Model Portfolio, was cashed out on November 20, 1999. The original investment of $246,850 as of January 1999
had grown by 175% to $678,540, in less than two years. [IHTIR Dec. 2001 vol.XVII issue No. 1] This performance
bested many of the top high-growth American or off-shore mutual funds.