Among the Israeli companies that I hold in my portfolio tracked by "Globes", several stood out with very strong first quarter returns, including Attunity (Nasdaq: ATTUF.OB), AudioCodes Ltd. (Nasdaq: AUDC; TASE: AUDC), Radware Ltd. (Nasdaq: RDWR) , Mellanox Technologies Ltd. (Nasdaq:MLNX), EZChip, SanDisk Corporation (Nasdaq:SNDK), Camtek Ltd. (Nasdaq: CAMT; TASE:CAMT), Allot Communications Ltd. (Nasdaq:ALLT), and Orckit Communications Ltd. (Nasdaq: ORCT; TASE: ORCT).
At its peak for the quarter, Orckit posted a return of nearly 100%, but the management of its offering this week, which in my opinion was clumsy, led the company to record "only" a 46% quarterly return.
Orckit's offering, to raise an immediate $10 million, was clumsy, because there is no other word to describe the trading, which in my opinion hinted suspiciously at trading on inside information last Thursday and Friday, especially before and after the beginning and ending of trading, at very high turnover, a rare phenomenon. It happened before the official notice about the details of the offering just at the morning on Monday, the day before the holiday, and from which it turned out that 2.8 million shares were sold at $3.78, a price that was significantly below the market price.
Because it was the day before the holiday, I assume that Israeli investors did not participate in the offering, but US underwriter Roth Capital apparently succeeded in finding only "flippers", who are as interested in Orckit as in last year's snow. They sold short this week nearly all the shares they bought in the offering, and each sale yielded them an immediate profit, and only bitter herbs for other investors.
If over the next five years Orckit becomes the next Apple, those "flippers" are left with some warrants that they received in order to sweeten the deal.
In contrast to the Orckit offering, new Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) chairman Dr. Phillip Frost showed us two weeks ago how to make a significant secondary offering for a small company cleanly, without destroying the share price and without hurting investors who did not participate. Prolor Biotech Inc. (Amex: PBTH) , of which Frost is chairman, raised, through underwriter Jefferies Group, $24 million from institutional investors, who agreed to a lock-up period of one full year, because they believe in the company for the long term.
Despite the fact that the offering was held at a price of $2.35, which was significantly lower than the market price, the share price did not collapse. Rather, the opposite occurred the share's price jumped from $3 on the day of the offering to $4.40 yesterday.
Right Radware
The share price of Radware Ltd. (Nasdaq: RDWR) rose 45% in the quarter to $22, a price it hasn't seen since four years ago, right before a series of many disappointments and profit warnings, which brought the share down to a low of $4.75 a year ago, at the low point of the crisis.
As I wrote two months ago when I added it to the portfolio, the brilliant move to "grab" rival Alteon from bankrupt Nortel's receivership signified Radware's turnaround. In addition there were significant rehabilitation processes, and primarily strengthening the senior management with talented people with a lot of experience, who helped CEO Roy Zisapel to return the company to its current valuation of over $400 million.
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2010
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