When controlling shareholders or parties at interest in listed companies buy shares in those companies, usually after a period of decline in their prices, it’s generally said that this is a signal to investors that they consider the share price cheap. (In Israeli law, a “party at interest” is someone who holds more than 5% of the shares in a company, or who holds 5% of the voting rights, or who can appoint a director or the CEO, or who is the CEO or a director). On the other hand, when they sell large quantities of shares, that could indicate that those who know a company’s business position better than anyone else believe that the share price has become expensive, and that the period of rises is close to its end.
From the low of the beginning of the Swords of Iron war in October 2023, the main indices on the Tel Aviv Stock Exchange have risen a phenomenal 60%, and in the past year have outperformed the Wall Street indices. Many real estate, finance, infrastructure, and hotel stocks have shot up to record levels. All this comes against the background of Israel’s impressive achievements in the war, the belief that the war is about to end, and the assumption that, after it, these industries will boom.
A year’s worth of sales in a single month
Coincidentally or not, in the past month, some of the largest shareholders in Tel Aviv Stock Exchange-listed companies have sold shares in bulk. “Globes” investigated and found that the eight largest sell-offs by major shareholders so far this year total more than NIS 3 billion, which is close to the total for the whole of 2023.
In all of 2023, parties at interest in Tel Aviv-listed stocks sold shares to the tune of NIS 4 billion. In 2022, the total was NIS 6.4 billion. Even in 2021, a peak year for the Tel Aviv Stock Exchange, sales amounted to NIS 7.7 billion. At the current rate, 2025 could set a new threshold for such sales.
Besides the sellers, the State of Israel stands to be a large gainer from these sales through taxes on the profits (from those who pay taxes in Israel), which will help a little in trimming the huge fiscal deficit arising from the war.
Shmuel Ben Arie, VP of local market investment at Pioneer Wealth Management, said, “I don’t recall such an aggressive sell-off of shares in month. Clearly it’s a sign that parties at interest think that the price of share sis high, and that the risk-reward ratio has changed for the worse. The market is very much stretched upwards. All the same, it’s hard to know what the considerations of parties at interest are. They bought the shares at half the current price and sometimes less than that. The often have debts. And it must be remembered that against every seller there’s a large investor who thinks it’s worth buying.”
Almost half the sales by parties at interest in the past month are accounted for by one person, Aaron Frenkel, the most successful private investor in the local stock market, who sold 2% of the shares in Bank Leumi for NIS 1.4 billion and at a profit of over NIS 600 million.
Frenkel, who bought the shares in the bank’s equity offering two and half years ago, carried out the sale after Bank Leumi’s share price had risen 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 makes a quick in and out and exits with a large gain. It was the same when he invested in UAVs company Aeronautics a few years ago, and in real estate company Gav-Yam (Bayside).
The second-largest sale was by Idan Ofer in a company that, though 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 siege of the Red Sea by the Houthi rebels in Yemen sent shipping prices soaring and restored 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 over 120% since the beginning of the war.
On the last night of 2024, David Fattal and his ex-wife Hadassa sold shares in the hotel group that nears their name to the tune of NIS 207 million. Even after the sale, David Fattal, who is CEO of the company, continues ot hold 51% of it, worth over NIS 4.1 billion, and Hadassa continues to hold 5.2% , worth NIS 424 million. Fattal Holdings’ share price has risen by 19% in the past year, giving it a market cap of NIS 8.1 billion.
Still at the end of December, the four Shapira brothers who control infrastructures company Shapir Engineering took advantage of a 50% rise in the company’s share price within three months, and sold shares for NIS 153 million (altogether 1.7% of the company). The sale came almost five years after the last time the brothers realized shares, in February 2020, just before the outbreak of the Covid pandemic. In total, the four brothers – Harel, Israel, Gil and Chen Shapira – have sold shares to a value of about NIS 1 billion since the company was floated on the Tel Aviv Stock Exchange a decade ago.
Another big seller is hedge fund Manikay Partners, which sold almost 5% of the shares in the Tel Aviv Stock Exchange for NIS 202 million. Manikay Partners is the largest shareholder in the stock exchange, and its sale of shares back to the Tel Aviv Stock Exchange itself aroused controversy and even led to a petition to bring a class action on the grounds of infringement of the rights of the minority shareholders. At any rate, the Tel Aviv Stock Exchange’s share price has risen by 73% in the past year, giving it a market cap of NIS 3.7 billion.
Not for the first time, shareholders in hot defense stock Next Vision have been responsible for a large sale. The controlling shareholders in the company, a developer of day-night cameras mainly for UAVs and drones, continue to part from shares, following the meteoric rise in its share price since it was floated. At the beginning of the year, they sold shares for a cumulative NIS 101 million. The share price had risen another 84% over the previous year, giving the company a market cap 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 a 49% rise in its share price over the year. As with Shapir Engineering, the rise is attributable to optimistic forecasts for the infrastructures sector in Israel.
The sales by parties at interest come at the same time as what could become a wave of IPOs in Tel Aviv after a two-year drought, and private placements by several residential real estate companies, taking advantage of the heights their share prices have reached.
“In Israel, you sell when you can”
A market source said of the share sales, “It’s natural profit taking after such sharp rises on the stock market. There’s no need to attribute great importance to it at the moment,” while another source said, “In the Israeli market, because of its small size, you sell when you can, not necessarily when you want to and at the price you want. It’s an opportunity for major shareholders to realize shares and meet with some cash.”
A third source adds, “The market is not as cheap as it was, but in my opinion it’s certainly still not expensive. The banks, for example, have come some way, but their p/e ratios are still low, and that’s also true of the insurance sector. The real estate sector isn’t expensive either, if we see a fall in interest rates.
Published by Globes, Israel business news – en.globes.co.il – on January 27, 2025.
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