It has been a little while now since investors have heard from SodaStream’s (SODA) management team, so the team at Capital Ladder Advisory Group has created this article to better inform investors on some quarterly developments. SodaStream is one of the most misunderstood companies and it remains a much maligned stock in the marketplace, in part because of the nature of its origins and Israeli incorporation. Many individuals, groups and even governments around the world have a staunch opposition to SodaStream because the company has a production facility in the occupied territory of the West Bank, Mishor Adumim. The BDS (boycott, divest, sanctions) movement has aimed to curtail the consumption of goods produced in these West Bank and surrounding occupied territories. SodaStream investors should continue to read developments regarding the BDS movement as protestors recently showed up at the newly opened SodaStream store in the UK and held peaceful protests outside the store.
Recently, SODA shareholders encountered a better than 10% drop in share price, leaving many investors in wonderment as to the reason for the sudden and impacting fall. Both retail and institutional investors were left scrambling for headlines and news regarding the 3 day sell-off. Having an advanced network of resources can prove beneficial when investing in an international company such as SodaStream. While such resources can almost never predict the movement of a company’s stock price, they can at least provide insightful information pointing toward potential price movements. So why the sell-off in shares of SODA and why did it take so long to occur?
October 8, 2012–On September 19, 2012, Ireland’s Joint Committee on Foreign Affairs and Trade set forth a proposal for a ban on illegal Israeli settlement goods. The proposal was sent to the deputy head of government, Eamonn Gilmore, who is also the minister of foreign affairs. This proposal didn’t make headlines in the UK and Ireland until Friday September 21. Most SodaStream investors didn’t uncover this developing story until more than a week later which sparked a subsequent sell-off in shares of SODA and a rise in daily volume of shares traded. What is most relevant about this proposed ban from the Irish Parliament is that such a proposal would prove illegal according to the EU/Israel Association Agreement. Within this agreement, it concludes that no single member party of the EU can ratify or change the existing agreement unilaterally. Ireland’s proposed ban, which also urges greater enforcement of human rights for Palestinian citizens working in the occupied areas of the West Bank, infringes upon the EU/Israel Association Agreement. This proposal is really nothing new from Ireland as the country has attempted such a proposal in July of 2011. Essentially, the proposal does little more than create a call for the EU to seek greater actions with regards to global human rights issues as the practicality of the proposal would prove to be illegal and damaging to EU/Israel relations. While we have uncovered the legalities of this proposal, the prevailing sentiment should be considered as part of one’s investment thesis in SODA and investors should also be aware that SodaStream International has production facilities in 13 countries around the world and one in Israel “proper”, which is considered a legal Israeli territory. Additionally, even though a unilateral ban would prove to be illegal in practice, stranger things have happened over the last several years with regards to government policy…Read More>>