It is sometimes hard for us to criticize Check Point Software Technologies Ltd. (Nasdaq: CHKP). It is hard to criticize a company that has an average quarterly cash flow of $90 million, which has $1.4 billion in cash, and which has saved the lost honor of Israeli high tech.
It is indeed hard, quite hard, but as time goes by and Check Point's share stagnates at the same price for years on end, criticism becomes easier, especially when looking from the side as a company founder sells shares as if there is no tomorrow.
Check Point's share rose 4.4% over the past year, it is down 3.8% from two years ago, and 5.4% up from three years ago. These are not returns to boast about. True, Nasdaq is down 36% from its level of three years ago, but an investment in Check Point shares has had about the same yields as an investment in US government bonds.
Investors may simply be following in Check Point vice chairman Marius Nacht's footsteps. There is an axiom that says that parties at interest always sell at peak and by at trough, so it is worthwhile watching what they do. Since Nacht began to sell Check Point shares in late 2006, the share's yield has been minus 1%, which may be considered a demonstration of this axiom.
Regrettably, Nacht declines to give interviews. He gives the stage to Check Point chairman and CEO Gil Shwed. A search in "Globes" archives for a quote by Nacht will turn up nothing. We cannot state, "Nacht is not putting his money where his mouth is."
It seems that investors are saying it for us.
Shares sales by parties at interest are an integral part of the capital market. Sales of shares finance additional payments for the exercise of options are legal and legitimate, but when they become repetitive, and parties at interest signal investors that they will not put up their own money to exercise options, even though they have it in plenty, then questions start to arise.
Published by Globes [online], Israel business news - www.globes-online.com - on February 1, 2009
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