– The Resource on Israel's Economy, Companies & Markets

Hebrew French Spanish Portuguese

Jamia Jasper: Second Quarter 2012 Review

Published on Jul 24 2012 // Columnists

American Israeli Shared Values Fund (AISHX): Second Quarter 2012 Update–July 2012


During the three-month period ending June 30, 2012, the benchmark Tel Aviv 100 Index fell 6.65%. Year-to date, the Tel Aviv 100 Index is down 0.88%. During the quarter, most worldwide stocks indices fell on concern that the economic weakness in Europe will spread to other regions of the world as decreasing levels of exports to the Eurozone lead to lower levels of economic activity the U.S. and Asia. As Europe is Israel’s largest trading partner, weakness in Europe affects Israel.

Economic Overview

Israel’s economy continues to expand, but with the slowdown in Europe, Israel’s economy is expanding at a slower pace. Israeli GDP increased at an annual rate of 2.9% during the first quarter, a slight slowdown from the 3.1% rate in the fourth quarter of 2011. The Bank of Israel continues to expect GDP growth of three percent for the full year. The rate of unemployment for May was 7%, up from 6.7% at the beginning of the year. The rate of inflation also dropped from year ago levels. In response to this economic cooling, on June 5th, the Bank of Israel lowered the official lending rate from 2.50% to 2.25%.

Winners and Losers

With equity markets declining during the second quarter, it is no surprise that Israeli stocks had several notable detractors during the quarter. Cellcom Israel and Partner Communications fell 50% and 46.7% respectively during the quarter in the wake of poor earnings results due to a change in Israeli regulations which adversely affected both companies. Shares of Check Point Software Technologies fell 22.3% during the quarter as investors became increasingly concerned that a slowing economy will result in slowing spending for enterprise software products such as Check Point’s security offerings. Lastly, shares of SanDisk Corporation fell 26.4% during the quarter after the company reported weak first quarter earnings and lowered guidance for the second quarter as well.

Nonetheless there were some standout winners among Israeli stocks that warrant mention. Mellanox Technologies rose 69.3% during the quarter following first quarter earnings which exceeded investor expectations by a significant margin. The company also significantly increased future earnings guidance as Mellanox’s server interconnect products capture greater market share. Attunity Ltd., rose 56.6% during the quarter. Attunity is a micro-cap company that provides data integration software which aids in data sharing. Attunity announced strong earnings and cash flow growth and outlined plans to have the company’s shares listed on the NASDAQ exchange. Lastly, shares of RADWARE Ltd., a provider of network security solutions, rose 8% during the quarter following the release of strong first quarter earnings results.


Israeli stocks are trading at less than 12 times this year’s earnings estimates and given the continued development of innovative technology products there, we continue to find that market attractive. In the midst of a jittery market dominated by traders rather than investors, short-term volatility is likely to persist. Over the longer-term, however, we expect investors to be rewarded.

Jamia C. Jasper
Founder and Portfolio Manager
AmerIsrael Capital Management, LLC
207 East 83rd St., Suite 3|New York, NY 10028 |Tel: (212) 327-1345| |

The information contained in this message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. To the extent permitted by law, AmerIsrael Capital Management, LLC does not accept liability arising from the use of this communication. AmerIsrael Capital Management, LLC, a registered investment adviser, serves as investment adviser to the American Israeli Shared Values Fund. Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value and return will vary, and you may have a gain or loss when you sell your shares. All mutual funds can be affected by market and investment style risk. The Fund’s investments in small and mid-capitalization companies could experience greater volatility than investments in large capitalization companies. Request a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. The prospectus can be obtained by calling 1-212-327-1345 or by downloading it from the website at

Leave a comment

You must be Logged in to post comment.