Who will be working in all of these new offices?
The week that was…
VanEck Israel ETF (NYSEARCA:ISRA) down 1.6%
BlueStar Israel Technology ETF (NYSEARCA:ITEQ) down 2.7%
Ark Israel Innovative Technology ETF (BATS:IZRL) down 3.3%
Ishares MSCI Israel ETF (NYSEARCA:EIS) down 3.8%
TA-35 down 1.5% (for week ended 12/8)
Walking around TLV these days, it’s hard to miss the construction cranes that seem to be everywhere. But all of that new office space has us sensing a dissonance with the flood of headlines about tech companies shedding staff or calling it quits altogether.
With all of the layoffs, who is going to fill all of those offices?
That got us wondering about which companies will be the first to feel the impact of the commercial real estate slowdown. Gav-Yam Lands (TLV-GVYM) is down almost 8% in the past four weeks. Melisron (TLV:MLSR) has declined 7% in the same period. Those numbers are in line with the TA-Real Estate index, which is down 6.9%.
But local builders are faring even worse. While the TA-Construction index is down 6.4% over those same four weeks, a number of the gauge’s constituents are seeing double-digits in the red. Shikun & Binui (TLV:SKBN) is off more than 20%. Israel Canada (TLV:ISCN) is down more than 16%. And Bonei Hatichon (TLV:BOTI) has lost almost 14%.
Yet the banks can’t raise new money to lend fast enough.
James Fu Bin Lu knows when to fold ‘em
When Joffre Capital walked away from a deal to buy a majority stake in Playtika Holding, much of the coverage made mention of governance issues that made the Chinese firm nervous.
A closer read of the letter from Joffre’s James Fu Bin Lu, resigning from the mobile casino games company’s board, should make any investor nervous.
After five months as a board member, Lu walked away from the table because of “significant deficiencies in the company’s current governance practices.”
How significant? “The Board is largely controlled by management, leading to several instances of conflicts of interest and the possible enrichment of management at the expense of stockholders,” he wrote.
As well, he said that the lack of independent board oversight of management has also led to significant costs and write-offs in at least one related party transaction.”
Props here go to Edwin Dorsey, a fellow Substacker, who covered Playtika’s structural and market issues a year ago in his newsletter, The Bear Cave. “Playtika is reliant on large tech platforms, is positioned against social winds, is encumbered by $2.5 billion in debt, plays in a highly competitive industry with low barriers to entry, profits off of gambling addicts, and faces major and immediate headwinds in its most profitable games.”
Maybe investors were listening to Dorsey. Playtika’s shares are down more than 56% since he warned “Don’t play with Playtika.”
Finding magic in the mushrooms
Our bingo card for 2023 is filling up fast. One of the topics is the Israeli psychedelics startup scene.
We’re watching with interest state-level legislation in the U.S. Following a couple of years of successes in liberal states, psychedelic drug reform is becoming a bipartisan issue, according to a new report in JAMA Psychiatry.
As the consensus grows that belligerent influence by the Israel law enforcement establishment has pretty much crushed any ideas of Israel being a cannabis nation, the question is whether the country’s nascent psychedelics firms can avoid the issues that stymied medical marijuana.
To be sure, there’ve been signs that the government is open to easing the rules that will no doubt help Israeli firms like developer PsyRx and medical psychedelics investment fund Negev Capital. The country broke new ground in 2019 becoming the first country to greenlight MDMA-assisted psychotherapy for PTSD under a “compassionate use” designation.