Founded in 1933, Moritz & Tuchler is one of the longest-standing companies on the capital market. One of the founders of the Tel Aviv Stock Exchange, it has since been a member of the TASE and of the TASE clearing house.
With a payroll of 30, the company has branches in Tel Aviv, Jerusalem and elsewhere. It manages investment portfolios for more than 1,000 customers, including governmental and industrial corporations, banks, insurance companies, provident funds and private customers.
The company also deals, through its subsidiaries, in issuance underwriting and mutual fund management.
Its mutual fund management company manages Yesodot, a flexible fund, which has produced the highest yield in Israel since the beginning of the ‘nineties, not only among flexible funds, but among all mutual funds operating in Israel in that period.
In the short term
When speaking of the stock market in the short term, Moritz & Tuchler list a number of dampers on positive market behaviour. They list five key factors they believe are liable to prevent an advancing stock exchange trend within that time range:
- A stock exchange tax - The Ministry of Finance was recently reported to be planning the imposition of a tax on stock exchange investment gains, which were hitherto tax exempt. Uncertainty surrounding the imposition of the tax is causing investors to wait until the picture clears, and this too is one reason why stock exchange activity volumes have shrunk in recent weeks.
- High real interest rate - Adversely affecting corporate results, this interest rate creates other investment alternatives, such as index-linked bonds which yield very high returns of more than 5.5%-6.5% gross.
- Political uncertainty - With no progress being made in political agreements, both foreign and local investors are uneasy about investing in Israeli companies. It seems reasonable to assume that positive developments on this level will help generate a positive stock market trend.
- The recession - The recession will affect corporate results for the upcoming quarters. The slowdown is liable to be injurious to the profitability of no few companies, causing current company prices to be seen as relatively high.
- Basket exchange rate close to fluctuation band floor, impinging on export profitability - As regards this difficulty, Moritz & Tuchler believe that a significant change of the exchange rates of the various currencies, mainly the dollar, as against the shekel, could improve the profitability of export companies, which are the leading industrial firms in the Israeli stock market.
In the long term
Moritz & Tuchler believe the stock market can get back on an advancing track in the long term as various aspects improve.
The company sees the lowering of the inflation rate as a significant achievement whose benefits will be felt in the future, and which will cause the real interest rate to stabilise at lower than current levels.
The economy, Moritz & Tuchler say, is capable of pulling out of the recession with an interest rate reduction and a rise in the dollar exchange rate. The prices of many securities, according to the company, are at a level such as to make them an interesting investment, since the economy is sound and interesting, and because the TASE will ultimately advance.
Moritz-Tuchler's share portfolio includes six leading shares, along with a recommendation for another seven shares, whose market value is significantly lower than their asset value.
Israel Land Development Corporation
This holding company deals in real estate, insurance, communications and hotels. The "Ma'ariv" transaction, at a company value of $250 million before the money, is an indication of a high value for the newspaper, well in excess of book value. Also, the company is expected to distribute a large dividend to its shareholders. Not to be ignored, on the other hand, is the fact that Ofer Nimrodi, a controlling shareholder in the group, has been convicted of criminal offences.
Share quotation when recommended: NIS 21.7
Elbit Imaging
The company sold its principal holding in the imaging field, securing a large capital gain and plenty of cash in hand. The company has problematic holdings in subsidiary Elscint. The company will shortly take steps to focus its future activity in an effort to streamline its problematic divisions. The company is traded well below book value, making its shares a more attractive investment.
Share quotation when recommended: NIS 29.8
Elco Holdings
This holding group holds four principal companies: Elco Industries, Electra (Israel), Electra Consumer Products and Shekem. Although it has been through some awkward times, the company's relative value is interesting, and improved subsidiary business could create value in the parent company.
Share quotation when recommended: NIS 17.8
Caniel
The company is owned by Discount Investments and the Ellern group. The company has large scale real estate assets in the Petah Tikva area. It does not constitute a strategic investment in the Discount Investments investment portfolio, and Discount Investments may accordingly dispose of it, thereby raising the value of the share.
Share quotation when recommended: NIS 34.8
Kardan
This is a dynamic, interesting holding group. Kardan's holdings include automobile importer UMI, high-tech sector holdings, both direct and through the Central Securities Company (we recently heard of a fight for control in that company), real estate in Poland and others. The company is well managed, and despite a very sharp rise in the value of its shares, is still being traded at below book equity, making it an interesting investment opportunity.
Share quotation when recommended: NIS 4.7
Export Investments Corporation
A holding company that controls Jerusalem Bank and has holdings in Readymix, Direct Insurance and others. Although most holdings have been currently posting losses, we believe this to be a conservative company, with interesting long-term holdings. We regard the current share price of Export Investments as conducive to investment.
Share quotation when recommended: NIS 7.7
And another seven
We thought it a good idea to list another seven companies, whose shares are being traded at very low value relative to their asset value:
- Kesher Rent-a-Car - A car hire company, representing Hertz in Israel.
- Magor Holdings - An investment company, specialising in real estate. Magor is the controlling shareholder in Lifshir.
- Packer Plada - Among Israel's leading steel works.
- Arad - A holding company owned by Shlomo Eisenberg. Arad holds shares in Isras, Team Computers and others.
- Ellern Migdal Investments An investment company with holdings in Caniel, Mehadrin, and a series of marketable shares.
- Meir Ezra - Holds an important share of the local meat market.
- Danbar - A holding and investment company, mainly in real estate and securities.
Moritz & Tuchler may be active in any or all of the above-mentioned securities. Nothing herein contained should be construed as a recommendation to purchase or sell securities, and anyone acting in accordance herewith does so at his/her own risk.
Published by Israel's Business Arena July 16, 1998
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