It used to be that if you wanted to invest in Israeli companies trading on the Nasdaq, you plunked some cash into Teva Pharmaceutical (TEVA). The more savvy pro-Israel investor would track Israeli IT companies like Check Point Software Technologies (CHKP), a leading security firm instrumental in developing computer firewalls, or telecommunications giants like Amdocs (DOX), a $7 billion billing company.
But few New York-based investors are aware that more than 120 Israeli companies are currently trading on Wall Street — more than from any other foreign country. And even with a list of Israeli companies in hand, investors lack the real-time data and research to ensure that their investments not only bolster their connections to the Holy Land, but also pad their portfolios.
That’s where Aaron Katsman and Zack Miller come in. They’re the masterminds behind the Israel Opportunity Investor, a fee-based research newsletter focusing on Israeli stocks that trade on the U.S. exchanges. Launched last month, the newsletter is the first of its kind to provide in-depth investment research focused exclusively on this niche market.
“We read all the time about the innovation and ingenuity that comes out of Israel,” says Katsman. “You hear that HP is making another purchase in Israel. The average person wants to tap into that. Why should HP make all the money?”
Miller and Katsman are both finance professionals in their 30s who made aliyah and live in Jerusalem. Katsman, a Seattle native who graduated Yeshiva University, founded and managed a private banking group for Citigroup and is a well-known commentator on Israeli stocks. Miller, originally from Miami, earned his MBA from the Kellogg School of Management and then joined a $2.5 billion hedge fund based in Israel. He later worked as the vice president of business development at Seeking Alpha, a popular financial blog that receives 2 million visitors a month.
The two met when Katsman began blogging regularly about Israeli stocks on Seeking Alpha. Both ardent supporters of Israel, they spoke at length about ways to capitalize on Israeli ingenuity. They searched for a research newsletter focused on Israeli start-ups. When they couldn’t find one, they decided to start their own.
The monthly Israel Opportunity Newsletter is distributed through Forbes for $299 a year, or through the company’s Web site, www.israelnewsletter.com. Each newsletter features a “stock of the month” chosen by the company’s researchers, as well as an interview with the senior management of up-and-coming and established Israeli companies. “We introduce them to the 120 Israeli companies nobody knows about,” says Miller. “When it comes to small-cap technology companies, Israel is king.”
Their secret sauce? “We provide content that’s actionable for subscribers,” says Katsman. “Too many charts and mumble-jumble is beyond the reach of most investors.”
Anyone can turn on Bloomberg or check financial quotes online, Miller adds. “What was lacking was commentary and opinion. We’re not necessarily saying it’s a ‘buy,’ but rather, ‘Here’s the catalyst for why the company will make money over the next few years.’”
The two have formed an impressive network within Israel’s financial community. “It’s a small universe,” says Katsman, who also runs an investment advisory firm, America Israel Investment Associates, which Miller recently joined. AIIA manages the Israel International Growth Managed Portfolio, which is open to any U.S. citizen with a minimum $50,000 investment. Before the fund opened, investors needed deep pockets to cash in on Israel’s technology edge or would have to deal with the hassles of opening a bank account in Israel, exchanging dollars into shekels and speaking Hebrew to trade on the Tel Aviv Stock Exchange.
The duo hopes to establish a reputation as the authority on Israeli stocks. In some ways, they already have. “Leading analysts at big Wall Street firms call us for ideas,” says Miller. “That proves our model and value to the investor.”
But make no mistake — the newsletter isn’t pro-Israel propaganda. “It’s not a blue-and-white newsletter,” says Katsman. “We’re discovering trading and investment opportunities, and they just happen to be in Israel.”
Profit Motive is an occasional series profiling Jewish entrepreneurs who are making their mark here in a variety of business ventures.