|
|
James Passin manages the Firebird Global Small Caps Fund for Firebird Management LLC and is a Contributing Editor with Taipan. Mr. Passin joined Firebird as a Portfolio Manager in July 1999. For the four years prior to joining Firebird, Mr. Passin was Taipan's and Taipan Trader's Director of Financial Research.
Mr. Passin is known for his brash contrarian approach to stock picking. His maverick views on the market and stock picks have been cited in major newspapers around the world. James Passin is a regular speaker at financial conferences. Mr. Passin, a Kentucky Colonel, studied philosophy and the classics at St. John's College.
Passin's fund is currently a shareholder in ECTX, ELBTF, ORCT, ARMX, LCN, WMCO, CLCX. Several funds managed by Firebird are currently shareholders in UPRO, SGTZY, LUKPY, AOMOY, and VNFT. Passin's views are strictly his own and not necessarily those of Taipan or Firebird Management.
|
|
|
M |
The World Investor Review and Forecast
Outlook for Israeli and Middle Eastern stocks
by James Passin
Soldiers dragged through the streets like Hector before the walls of Troy... Riots... Terrorism... Protests in neighboring Arab countries... War cries from Sadism Hussein...
The Middle East is on the verge of total war. Oil will hit US$100 per barrel. Tel Aviv will be incinerated... A new Islamic alliance will initiate an apocalyptic Holy War against the West... And every last Israeli will be driven into the Mediterranean...
At least, this is the scenario that the mainstream press is trying to sell you. While violence is currently escalating in the Middle East, the doom-and-gloom scenario is nothing more than a retro-colonialist fantasy.
Pan-Islamic unity is a myth. Yes, there are fanatical Islamic sects all over the world. A minority of the fanatics belong to highly organized, well-financed organizations that know how to take advantage of political chaos. Crazy governments (Iraq, Libya) attempt to advance their strategic interests by contributing to regional instability. But the idea that the masses in Jordan, Egypt, Saudi Arabia and Syria will unite in some colossal reverse Crusade is absurd.
The Palestinians have raised the stakes in negotiations for a permanent peace settlement. This was achieved by taking advantage of the U.S. presidential cycle (as a lame duck, Clinton was unable to act as a credible negotiator). Israel's recent withdrawal from Lebanon shows its willingness to take radical action to promote peace. I believe that the greater the current cycle of bloodshed, the greater the likelihood of a permanent peace settlement.
A New Era of peace in the Middle East would ignite an explosive re-rating of Middle Eastern assets. My Middle Eastern stock recommendations, including Aramex (ARMX:NASDAQ) and Suez Cement GDR (SZCD:London), would benefit from this environment.
While the turmoil in Israel has destroyed the market for Israeli tech stocks, there is no fundamental reason for this correlation. Israeli techs like Elbit (ELBTF:NASDAQ) and ECTel (ECTX:NASDAQ) generate most of their sales outside of Israel. Unless there is a general draft, "blood in the streets" will have absolutely no impact on the day-to-day operations of these companies.
In fact, Israeli tech companies benefit from the shekel depreciation that generally occurs during headline-worthy political turmoil. Furthermore, Israeli techs tend to be under-leveraged, with no long-term debt and large cash balances (thanks to the conservative nature of most Israeli executives), leaving their balance sheets impervious to any spike in domestic interest rates triggered by currency depreciation.
Unfortunately, there is a lot of Israeli money in Israeli tech stocks. During times of sustained political unrest, the Israeli money tends to withdraw into more conservative assets. There is also a lot of retail money in the NASDAQ-listed Israeli techs, which tends to overreact to CNN reports.
The collapse of U.S. tech stocks hasn't helped their Israeli counterparts. Mainstream investors are looking for excuses to dump tech stocks. I have never lost money buying Israeli techs during Middle Eastern unrest. Time to feed.
| Israeli tech cheat sheet |
| Company |
Decline from 52-week high |
Market Cap (USD) |
Liquid assets (USD) |
Trigger |
| ECTX |
0.66 |
$240,000,000 |
$42,000,000 |
Blow-out earnings & no float |
| ELBTF |
0.72 |
$140,000,000 |
$95,000,000 |
Contop private placement |
| ELRNF |
0.53 |
$568,000,000 |
$86,000,000 |
Management always delivers |
| ORCT |
88%* |
$113,000,000 |
$107,000,000 |
DSL shortage |
| *Backs out TIGA spin-off |
Read on...
|
MMM |
