Israeli companies listed in the U.S. are posting the biggest gains this quarter among the 100 largest Tel Aviv-traded stocks as increased takeovers and improved profits mitigate global economic slowdown and geopolitical concerns.
Mellanox Technologies Ltd. is leading the advance on the Tel Aviv benchmark TA-100 Index with a 31 percent gain, after forecasting 80 percent sales growth in the three months ended Sept. 30. Fundtech Ltd. is up 23 percent in Tel Aviv after GTCR Golder Rauner LLC offered to buy the company for a 33 percent premium. Perrigo Co. rose to a record on Sept. 15 on plans to release 45 new products in 2012, adding $190 million in sales.
While mounting concern about Europe’s debt crisis, the Palestinian Authority’s quest for statehood and deteriorating ties with Turkey and Egypt pushed the TA-100 Index to the lowest level in two years last week, the Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York gained 3.3 percent in the last five trading days. Mellanox, Fundtech and Perrigo shares are listed on the Nasdaq Stock Market.
“Israel has a lot of U.S. listed companies that don’t have a lot to do with the local economy,” said Michael Shaoul, whose $704 million New York-based Marketfield Fund beat 92 percent of peers during the past year, according to data compiled by Bloomberg. “While economic activity is moderating, technology is resilient. Most of these companies have been able to show resilient earnings.”
Eight of the nine TA-100 companies that are rising this quarter are also listed in New York, according to data compiled by Bloomberg.
Mellanox, the 12-year-old Israeli adapter maker part-owned by Oracle Corp., jumped 17 percent last week to $35.16. The Tel Aviv shares advanced 20 percent to 133 shekels, or the equivalent of $36.35. The shares fell 3.1 percent today.
Chief Executive Officer Eyal Waldman said in an interview on Aug. 29 Mellanox is sticking with forecasts for 80 percent sales growth this quarter as orders persist even as the global recovery falters.
“We’re still going to be able to grow, as in these situations people tend to look for products that do more with less,” he said. “We still see the orders going in so we don’t feel the macro waves coming.”
Fundtech, the Israeli provider of banking software for Bank of America Corp. and HSBC Holdings Plc, surged 43 percent to $23.18 in New York last week. The Tel Aviv shares advanced 42 percent to 84.38 shekels, or the equivalent of $23.04. They lost 1.1 percent today.
GTCR, a Chicago-based private-equity firm, will pay $23.33 in cash for Fundtech shares, higher than the $17.56 closing price on Sept. 14, and will combine the company with BankServ, which operates in the same sector.
“Most Israeli companies that I’ve talked to are not concerned about geopolitical events in Israel because their operations and their customers are all over the world,” said Jamia Jasper, president of AmerIsrael Capital Management LLC in New York.
Perrigo, the Allegan, Michigan-based company that bought B’nei Brak, Israel-based Agis Industries Ltd. in 2005, rose 6 percent in New York last week to $96.35. The maker of over-the-counter drugs and infant formulas advanced 1.8 percent last week to 344.60 shekels in Tel Aviv, or the equivalent of $94.2. They gained 3.3 percent today.
EZchip Semiconductor Ltd. surged 19 percent to $34.87 in New York last week on speculation Marvell Technology Group Ltd. will buy the Israeli maker of network processors to stave off growing competition. The Tel Aviv shares added 19 percent last week to 133.90 shekels, or the equivalent of $36.6. They lost 3.8 percent today.
Ness Technologies Inc., the information technology-services provider, said on Aug. 30 its board approved the sale of the company to Citi Venture Capital International for $7.75 a share. The shares rose to a record on Sept. 7.
“For the most part, those are the ones that have revenue stream that are less dependent on the Israeli market per se and are better diversified,” said Chaim Fromowitz, the head of the private banking division at New York-based Bank Leumi USA, a unit of Israel’s largest lender by assets. Local companies “are being discounted because of the geopolitical events,” he said.
The TA-100 Index has lost 21 percent this year, or 24 percent in dollar terms, while the Bloomberg Israel-US 25 Index has dropped 20 percent during the same period. The shekel has weakened 3.8 percent against the dollar this year, the fourth- worst performer among 10 emerging-market currencies in Europe, Middle East and Africa.
Declines swelled after Turkish Prime Minister Recep Tayyip Erdogan expelled the Israeli ambassador and halted defense purchases, protesters attacked the Israeli embassy in Cairo and as the Palestinians are expected to present their application for full membership at the UN General Assembly meeting in New York Sept. 23.
Israel last week posted its first quarterly current-account deficit since 2008, as export growth eased amid an economic slowdown in the U.S. and Europe, the country’s main export markets.
Elbit Imaging Ltd., the investor in real estate and medical companies, sank 61 percent this quarter, leading declines in the index. Koor Industries Ltd., the holding company controlled by Israeli billionaire Nochi Dankner, dropped 46 percent.
Israeli technology companies raised $569 million in capital during the second quarter of 2011, the most in two years and up from $343 million in the same period last year, according to the Israel Venture Capital-KPMG Quarterly Survey released July 13.
Israel’s stock market was upgraded to developed market status by MSCI Inc. in May 2010, the same month the 63-year-old country was accepted to the Organization for Economic Cooperation and Development.
Israel, whose population of 7.7 million is similar to Switzerland’s, has 57 companies listed on Nasdaq, the most traded companies of any country outside the U.S. after China.
Syneron Medical Ltd., the Israeli maker of medical products whose biggest shareholder is Seth Klarman’s Baupost Group LLC, climbed 3.7 percent to $10.56 on Sept. 16, the highest level since Aug. 17.
Palomar Medical Technologies Inc., a maker of cosmetic lasers, said it will receive $31 million plus royalties from Syneron in a settlement of their patent-infringement dispute over hair-removal systems.
Syneron and its Candela unit will get a license to Palomar technology for professional hair-removal systems, and will pay royalties for home-use products, the companies said on Sept. 16 in a statement. Palomar will also get a license to some Syneron patents.
“We recommend that investors buy shares of both Palomar Medical and Syneron Medical following the announced settlement,” Anthony Vendetti, an analyst at Maxim Group LLC in New York, wrote in an e-mailed report today. “The settlement removes the legal uncertainty that has been an overhang on shares of both companies.”