BUSINESS
(
ISRAELI STOCKS
ARE HOT IN U.S.
For a small country,
Israel is making its mark on
the U.S. Securities Market.
By Kimberly Tifton, Staff Writer
A
B34
s of last July, 38
Israeli compa-
nies were regis-
tered on U.S.
securities mar-
kets, with the total market
value exceeding $37 billion.
In addition, Israeli companies
last year raised over $800
million in U.S. offerings of
their shares.
Many of these businesses
that are traded in the Unit-
ed States provide sophisti-
cated high tech products,
such as computer software
and support systems,
telecommunications and
medical equipment and de-
fense electronic systems. Add
to that list some tasty busi-
nesses like Elite Industries,
which produces chocolate, cof-
fee, snack foods and other ed-
ibles.
"Will Israel become the
next Japan?" asks Francis
Gallagher, director of re-
search for Oscar Gruss, a bro-
kerage house with offices in
New York and Tel Aviv
which specializes in Israeli
companies. "I don't think so.
But with its emerging tech-
nology, and research and de-
velopment potential, it could
become the next Silicon Val-
ley."
With the continued success
of Israeli businesses in the
United States and other for-
eign markets, American in-
vestment bankers are paying
close attention to these
stocks, and many have been
opening special departments
charged with following and
analyzing these companies.
In Michigan, brokers have
been inundated with requests
for Israeli stocks.
At Prudential Securities in
West Bloomfield, Vice Presi-
dent Robert Levy gets many
inquiries. In fact, one of his
clients will only buy Israeli
stocks, he says.
"The public views Israel in
high esteem because of its
high technology similarly to
the way they hayed viewed
the Japanese because of the
auto industry," Mr. Levy
says. "As a result, the stocks
are performing very well."
During the past 20 years,
says Joseph Ciechanover,
president of PEC Israel Eco-
nomic Corporation Ltd.,
American capital markets
have become valuable
sources of funds for Israeli
companies.
"Many of these companies
develop advanced technolo-
gy," says Mr. Ciechanover,
whose company acquires in-
terest in businesses that are
located in Israel, and whose
common stock is traded on
the American Stock Ex-
change (AMEX). "Many more
Israeli companies that have
attractive long-term growth
potential but are not well
known in the U.S. will likely
tap the U.S. capital markets
in the future for funds."
Shares of Israeli compa-
nies are traded in the United
States in the over-the-counter
(OTC) market through the
National Association of Se-
curities Dealers Automatic
Quotation System (NAS-
DAQ), or through two main
exchanges in New York: The
New York Stock Exchange
(NYSE) and the American
Stock Exchange (AMEX).
Two popular methods of
investing in foreign stock are
American Depository Re-
ceipts (ADR) and mutual
funds.
Some foreign stocks — like
Elite chocolates and Teva
Pharmaceuticals — are only
available in the United
States through ADRs — ne-
gotiable receipts represent-
ing ownership of stock in a
foreign corporation traded on
an exchange. ADRs only are
issued on widely held and ac-
tively traded corporations.
ADRs are issued by an
American bank and repre-
sent shares on deposit with
the American bank's foreign
office or its custodian. ADRs
allow investors to buy or sell
foreign securities without
taking physical possession of
these securities.
The easiest way to invest
in foreign securities is to buy
shares in one of the mutual
funds that confines its in-
vestments to foreign securi-
ties, according to Barron's
market experts Nick Apos-
tolou and D. Lawrence Crum-
bley.
First Israel Fund is the
only publicly traded Israeli
fund. It is a closed end mu-
tual fund. Other private mu-
tual funds — like
StarTrade Fund — are
also available.
One of the best
known Israeli compa-
nieS in the United
States is Scitex.
Founded by Efi Arazi
and Arthur Low in
1968, Scitex presented
its first public stock of-
fering in 1980 through
NASDAQ.
Scitex develops,
manufactures, mar-
kets and services com-
puterized prepress
systems used primari-
ly for graphic design,
printing and publish-
ing networks World-
wide. Profits are continual- ,
ly climbing. Between the first ``
quarter of 1991 and 1992,
Scitex sales rose 21 percent,
reaching $118 million.
Much of the rise was at-
tributed to the company's 18
new products and several
new customers. Among the
latest customers are Fortune,
People and Sports Illustrat-
ed magazines in the United
States, The Daily Telegraph
in England and CBS-Sony
Music Communications in
Japan. ,
Another well known Israeli
company, traded on AMEX;
is Laser Industries Ltd. After
years of losses, the company,
whose medical laser systems
are used in 3,000 hospitals,
clinics and private medical
practices in more than 40
countries, returned to prof- I
itability in 1991. I
Established in 1973, Laser
has had some corporate mile-
stones, earning recognition,:
in the medical community as
an innovator and contributor
to the increasing awareness
of surgical lasers.
The company went public
in 1980 and issued convert-
ible debentures on the OTC
exchange in 1986. A year ago,
Laser Industries, in an agree-
ment with American Dental
Laser in the U.S., applied its
surgical laser technique to-
ward the dental industry to ,,
be used for procedures such '
as gum surgery.
Since then, the company
has established an affiliate in
Germany.
Israel's pharmaceutical in-