When controlling shareholders or parties with an interest in listed companies buy shares in those companies, usually after a period of falling prices, this is generally said to be a signal to investors that they consider the share price to be cheap. (In Israeli law, an “interested party” is a person who owns more than 5% of the company’s shares, or who has 5% of the voting rights, or who can appoint a director or CEO, or who is a stakeholder) CEO or director ). On the other hand, when they sell large amounts of shares, it may indicate that those who know the company’s trading situation better than anyone else believe that the stock price has become too expensive, and that the period of rallies is coming to an end.
Since the start of the Iron Sword War in October 2023, the major indices on the Tel Aviv Stock Exchange have risen a whopping 60%, last year outperforming Wall Street indices. Many real estate, finance, infrastructure and hotel stocks rose to record levels. All of this comes against the backdrop of Israel’s impressive achievements in the war, the belief that the war is about to end, and the assumption that these industries will flourish after it.
The value of sales for a year in one month
Coincidentally or not, last month, some of the largest shareholders in companies listed on the Tel Aviv Stock Exchange sold their shares in large quantities. Globes investigated and found that the eight largest sales by major shareholders so far this year totaled more than NIS 3 billion, close to the total for all of 2023.
In the whole of 2023, interested parties in Tel Aviv-listed stocks sold shares worth NIS 4 billion. In 2022, the total reached NIS 6.4 billion. Even in 2021, the peak year for the Tel Aviv Stock Exchange, sales reached NIS 7.7 billion. At the current rate, 2025 could set a new threshold for such sales.
Besides the sellers, the State of Israel will be the biggest winner from these sales through taxes on profits (from those who pay taxes in Israel), which will help slightly reduce the huge fiscal deficit resulting from the war.
“I don’t remember a massive stock sell-off in one month,” said Shmuel Ben-Ari, vice president of local market investing at Pioneer Wealth Management. “It is clearly a sign that the parties involved believe the stock price is high, and that the risk-reward ratio has changed to Worse, the market is largely extended to the upside. However, it is difficult to know what are the considerations of interested parties who bought shares at half the current price and sometimes less than that. They often have debt and we must remember that for every seller there is a large investor who believes It is worth buying.
Nearly half of the interest-party sales last month were contributed by one person, Aaron Frenkel, the most successful private investor on the local stock market, who sold 2% of Bank Leumi shares for NIS 1.4 billion at a price of NIS 1.4 billion. Profits exceeding 600 million shekels.
Frenkel, who bought shares in the bank’s IPO two and a half years ago, executed the sale after Bank Leumi’s share price rose 73% in a year, making the bank the second most valuable company on the Tel Aviv Stock Exchange, after Teva. Frenkel is known as an opportunistic financial investor who gets in and out quickly and exits with big gains. It was the same when he invested in the drone company Aeronautics a few years ago, and in the real estate company Gav-Yam (Bayside).
The second largest sale was by Idan Ofer in a company that, although Israeli, is listed in New York. In late December, through Kenon Holdings, Ofer sold his remaining stake in shipping company ZIM for $178 million (NIS 650 million). This came after the Houthi rebel blockade of Yemen’s Red Sea sent shipping rates soaring and returned ZIM to the huge profits that characterized it during the Covid pandemic. ZIM’s share price has risen by 44% in the past year, and by more than 120% since the beginning of the war.
On the last night of 2024, David Fattal and his ex-wife Hadassah sold shares in the hotel group close to its name worth NIS 207 million. Even after the sale, David Fattal, the company’s CEO, still owns 51% of it, with a value of more than NIS 4.1 billion, and Hadassah continues to own 5.2%, with a value of NIS 424 million. Fattal Holding’s share price has risen by 19% in the past year, giving it a market value of NIS 8.1 billion.
At the end of December, the four Shapira brothers who control the infrastructure company Shapir Engineering benefited from a 50% rise in the company’s stock price within three months, selling shares for NIS 153 million (a total of 1.7% of the company). The sale came nearly five years after the brothers last made shares, in February 2020, before the Covid pandemic hit. In total, the four brothers – Harel, Israel, Gil and Chen Shapira – have sold shares worth about NIS 1 billion since the company floated on the Tel Aviv Stock Exchange a decade ago.
Another big seller is hedge fund Manikay Partners, which sold a roughly 5% stake on the Tel Aviv Stock Exchange for NIS 202 million. Manikay Partners is the stock exchange’s largest shareholder, and its sale of shares back to the Tel Aviv Stock Exchange itself has sparked controversy and even led to a petition for a class action lawsuit on the grounds that minority shareholders’ rights have been violated. However, the Tel Aviv Stock Exchange’s share price has risen 73% in the past year, giving it a market value of NIS 3.7 billion.
This isn’t the first time shareholders of defensive hot Next Vision stock have been responsible for a major sell-off. Controlling shareholders in the company, a developer of day-night cameras mainly for drones and UAVs, continue to part ways with shares, following a significant rise in its share price since its flotation. At the beginning of the year, they sold shares for a cumulative amount of NIS 101 million. The stock price rose another 84% compared to the previous year, giving the company a market value of NIS 5.3 billion.
Elco, the holding company controlled by Michael and Danny Salkind that controls the Electra Group, sold shares in it for NIS 85 million, after its share price rose 49% during the year. As with Shapir Engineering, the rise is attributed to the optimistic outlook for Israel’s infrastructure sector.
The sales by interested parties come at the same time as what could become a wave of initial public offerings in Tel Aviv after a two-year drought, and private placements by several residential real estate companies, taking advantage of the rises reached in their share prices.
“In Israel, you sell when you can.”
“It’s normal profit-taking after such sharp rises in the stock market. There’s no need to attach much importance to it at the moment,” a market source said of stock sales, while another source said: “In the Israeli market, because of its small size, you can sell when you can.” That, not necessarily when you want and at the price you want, it’s an opportunity for large shareholders to acquire shares and get some cash.
A third source adds: “The market is not as cheap as it was, but in my opinion it is certainly not expensive. Banks, for example, have come some way, but their P/E ratios are still low, and this is also low.” It is true for the insurance sector, and the real estate sector is not expensive either, if we see a decrease in interest rates.
Published by Globes, Israel Business News – en.globes.co.il – on January 27, 2025.
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