1. Bank shares. It was a boisterous and noisy week, in all ways and in all sectors, also in the economic arena. It started the night before, Saturday night. A huge authentic demonstration in the center of Tel Aviv, blocking Ayalon, demonstrations across the country and the outcry, anger and anxiety of crowds sitting at home in front of the screens. Torn-broken-screaming – ultra-Orthodox people fighting for their truth in front of a police force that manages to maintain order. But what if she didn’t succeed? If they broke into the Netanyahu family’s house? If the police were forced to be more violent? If blood had been spilled? If a civil war started and it could start “just like that” because two groups start fighting. It’s explosive.
Netanyahu was afraid. Netanyahu conveyed a message to the media this morning on Sunday that the legislation would be halted. He had nothing to say about the dismissal of the Minister of Defense, Yoav Galant, who were the ones who jumped-surprised the majority of the public who think it was a mistake or at least a mistake along the way. But the message to the media worked – it brought down the flames. Everyone was waiting for his words, which were delayed, and in the meantime, in the background of the understanding that there would be a stop in the legislation, the stock market did not collapse.
Then came the speech in the evening. There is a delay in the legislation. The legal reform-revolution will wait. At this point in time, there must have been great relief in a large part of the public, the anxiety subsided. But anxiety has waves. After all, what does the delay in legislation actually mean? This means that from now on for many weeks, a good few months, after Passover, in the next session of the Knesset, they will talk about the reform-revolution. What will they talk about? His opponent, will try to convince. Will they reach a conclusion? I wish, but is anyone willing to guarantee that we will not return to a dangerous situation like on Saturday night or God forbid an even more dangerous situation?
We will try to look at the situation in a cold way – we actually got “procrastination”. One of the favorite traits of the human race, but one of the harmful traits. Procrastination makes us ignore the problems, postpone solving problems. Go back to check and treat them if they come back, sometimes it’s too late. So, of course, it is clear and true that there was no other choice, they had to stop the “way down”. But let’s continue with a cold thought for the economic angle – what does procrastination do to the stock market and the economy? she does bad The stock market knows how to conduct itself when there is certainty. Bursa knows how to deal even if certainty is difficult. There are difficult military operations, there are difficult situations in state life, the stock market is struggling. The stock market does not know how to conduct itself and does not know how to deal with uncertainty.
When investors are told – we will take care of this big matter in 4-5 months, then some investors think to themselves – “Wait, then why should the stock market rise during this period, there is uncertainty for months and no one promises that there will be a solution. Why hold stocks in such a dangerous situation?” .
A stock market is a stock market, the evaluation-thought of investors can change every day, every hour, every minute. This is the basis of trading in the stock market. But towards the end of Netanyahu’s speech, despite a sigh of relief from all of us, a concern for the stock market crept into me.
This is why bank shares fell this week. The reason they held on until now was probably the feeling-belief that a quick solution must be reached in the current session. The majority believed in a flexible, softened solution, the majority believed that the extremists on both sides would not win. By firing Galant, Netanyahu managed to make the moderates become extreme and the rejection of the solution only creates huge uncertainty, a heavy cloud over our stock market. Banks, which are the mirror image of the economy, were hit more than the indices in general.
2. The gas shares soar – Yossi Abu sells the future profit today. A day before Bizportal’s energy investment conference, a fantastic deal was reported – British Petroleum and the Abu Dhabi Oil and Gas Company want to purchase 50% of New Med. The price – a value of NIS 14 billion, a 72% premium over the market price. A great success for the Delek group, a great success for New Med, which owns Leviathan. But it’s not only that and I only internalized it from Yossi Abu’s speech at the conference.
Abu said that the price of New Med essentially expresses all future flows as if they were received today. The premium that he and Idan Wells, CEO of Delek Group, and Yitzhak Tshuva, the controlling shareholder of Delek, brought to investors express the values that exist in New Med. The so-called – full price.
Okay, so what? And here comes the news. The investors get full value, but the buyers, who are each responsible for a good few percent of the world’s oil and gas production, do not enter if there is no upside. They enter at full price and still think they will make a return. These companies generate a return of 10% or more per year. They would not have entered into this deal if they did not think that after paying “full price” they would not receive such a return.
Where will their yield come from – more drilling. Also in the Ministry of Energy, both experts in the field and companies explained at the conference that there is twice as much gas potential in the area than what has been found so far. Also explain that the new technologies are more efficient and shorten processes. They talked about licenses that will go on the market in a few months – the oil giants will compete.
This deal is indeed as Abu Walls said – an expression of confidence, a force multiplier, and also as Erez Magadli, the investment manager of Migdal, which has a relatively large holding in gas shares, said – an understanding of how the big bodies relate to political, geopolitical situations. That is, we are constantly and rightfully afraid of the reaction of the foreigners – “how the foreigners will react in the stock market to the moves of the government, etc.” So it is important to know that there are entities that do not ignore it, but despite the problems – invest here.” However, at the conference, it emerged that there was also a large global entity that, because of the situation, did not enter the Israeli market.
So the gas stocks starred this week, it’s only necessary to mention – the gas stocks provided excellent returns last year when the stock market fell, and since the beginning of the year they are also in excess returns. Some eulogized them too soon, gas is expected to remain relevant for decades to come.
3. Yigal Landau, the owner of Ratio, is a tall, impressive and respected man. Yigal Landau and Yitzhak Tshuva are partners in Leviathan, partners on the way. But while Tesveva was the one who “earned” blasphemies, mud and fire of hostility from the media and the people, Landau was in the shadows. Answer was probably bigger, more familiar, more convenient for the attack.
This was an unfair and unfair attack mainly because anyone who wanted to invest in gas could. Tshuva and Landau let the public invest – everything was tradable on the stock exchange. It was unfair and fair because they changed the rules of the game in the middle. New laws and taxes were imposed on business entities. Now there are those who say to themselves “how will businesses be under a dictatorship, how will foreign bodies invest, laws can be changed, agreements are not agreements in a dictatorship”. Those enlightened people who write pages upon pages in the newspaper about this issue, forget that they demanded to change the laws for the answer that gas was found and along the way they hurt many investors from the people and also caused a delay of a decade in extracting the gas from the ground, not to mention the foolish and even bad idea of leaving the gas in the ground.
Landau laments the time that has passed without further drilling. But says that Razio will compete for new drilling. But what I took from the conversation with him is not the future, but the past. I went back to the past, I read, I remembered. History is also important to understand the future. In 2008, Razio was worth less than a million dollars on the stock market. She had 100% of the rights in Leviathan drilling.
Landau comes from a rich family – real estate, banking (Egod Bank). Razio was a kind of adventure, and in general it sat for a good few years as an irreplaceable stone. Landau and the Razio board had to make a decision? What to do with these drilling rights – in order to drill you have A lot of money, but is it worth taking that risk?
Sit down, think and say the following – “willing to risk 20 million dollars”. The entire drilling is in the area of 120 million dollars (I’m not exact, but it’s roughly) and from this the Razio board of directors decided to hand over 85% to the partners and fuel of an answer in their head. Everything else is history. Gave up a lot and got a lot. From a million dollars it turned into a billion dollars within a year. Since then, by the way, it has gone through many upheavals (Shashinsky, Adir, postponement of drilling), in the last two years the value returns to a significant increase and the value is still less than a billion dollars (about 840 million dollars).
That’s the power of giving up. That’s the power of long-term thinking. This is the generosity of winners. The victorious Landau realized that in order to achieve his goal, in order to be successful in ten and twenty years, he had to make a lot of compromises. This success overshadows the apparent “failure” who did not do everything alone. This success overshadowed the other good and successful businesses of the family. It also shows how much business decisions, even if in real time seem marginal, can be fateful.