Rumors have it that major companies are ogling JDS Uniphase (Nasdaq: JDSU), whose share price has dropped and become much cheaper. In fact, it’s past the point of rumors now; the US economic gossip columns talked about it openly on Friday. OK, so why did MRV Communications (Nasdaq: MRVC) go up? This share, which represents a company that collects dream companies in the optics sector, and most of whose companies still have no sales, rose 16.5% to $1.20, reflecting a market value of $109 million, or even a little less.
Let’s assume that some are buying the share because “If JDS has buyers, then why shouldn’t MRV, with all the jewels in its crown and its current end-of-the-season sale price?” It sure is possible, but why the impulsiveness? Let’s assume there are more buyers who saw the company announcement that it would buy back shares on the open market up to seven million “from time to time,” as is usually done. Is that a reason to jump at the share and pay 16.5% more for it? If the company buys back its shares, it won’t go into the market like a bull in a china shop. It will prefer to buy at $1, not $1.20.
So why did the share shoot up like that? I’ve got no idea, but I can guess. It’s because of what we wrote here already. Some investors buy for all sorts of reasons, and they all believe the same thing – “Here’s some cheap shares; it’s an opportunity.” Their problem is that most of the sellers believe it, so they’re becoming an extinct species. When there’s real demand for any piece of paper, no matter what it is, it moves up strongly; that’s all. Let’s get one thing clear – if anyone on Wall Street thought for a minute that you could buy control of MRV for $108 million or $150 million, they’d do it right away, if they had the money. Everyone knows it, too, so there are enough buyers in the market.
Teva (Nasdaq: TEVA) went up, because the cause of its fall, Biogen (Nasdaq: BGEN), ended not with a bang, but a whimper, with Biogen going up almost 8%. Did anything happen? Not a thing. The company announced that the US Food and Drug Administration (FDA) hadn’t asked for any new documents concerning the drug Biogen had submitted for testing, and that was enough. So Teva also calmed down, even though there’s not a trace of a link between the two. As I wrote, the generic field is the key to growth, and Europe is the place, and that’s encouraging news for Teva’s future.
Keryx Biopharmaceuticals (Nasdaq: KERX; LSE: KRX) and Compugen (Nasdaq: CGEN) are not benefiting from the recovery, although Keryx went up nicely on Friday. Both of them have reached truly ridiculous values, but that’s the way it is. Taro Pharmaceutical Industries (Nasdaq: TARO) is treading water, and becomes one of the more interesting buys around every time it goes down.
Nothing special happened with Israeli technology in the final two days of the week. Among the outstanding shares were Mercury Interactive Corporation (Nasdaq: MERQ), Amdocs (NYSE: DOX), and Check Point (Nasdaq: CHKP), which behave as if investors were abandoning them all the time. In Mercury Interactive’s case, the price may still be rather rich, but for Amdocs and Check Point, it’s a real mystery.
What can I say about the astounding case of Check Point? Unless someone can come up with a better reason for its decline, then I’ll say that I’ve got it. What is it? When a share like Check Point, or Amdocs, or Intel (Nasdaq: INTC), starts a downward spiral, as it has recently, rumors of problems start circulating. People start to doubt this wonderful company, just because the share goes down all the time. “Why would the share go down like that,” I ask, and I have no answer, except to say that if the communications industry doesn’t start investing in infrastructure soon, Check Point will continue falling. Is that true? Who knows? We’ll have to wait, but it’s getting more tempting to buy Check Point every day.
Finally, Sapiens International NV (Nasdaq: SPNS) won a very nice $9.4 million contract, but its share barely responded. Judging by the share, some institution or shareholder is trying to get out. If you ask me, it’s a buy opportunity, but that’s just my personal opinion.
The above recommendations were made by a person/s working in the investment industry, who may hold positions in securities mentioned in the column. This column should not be taken as advice to buy, sell or continue to hold any securities, and anyone acting on the advice of this column does so at his or her own risk.
Published by Globes [online] - www.globes.co.il - on June 16, 2002