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The institution for risk-taking: even the big ones are tempted to make fashionable investments - Walla! Of money

2022-03-24T09:46:52.654Z


Institutional investors invest our pension money in solid channels, but sometimes they also drift after a trend and invest in "dream" companies, just to deal with a break.


The institution for risk-taking: Even the big ones are tempted to make fashionable investments

Institutional investors invest our pension money in solid channels, but sometimes they also drift after a trend and invest in "dream" companies, just to deal with its break.

Here are two examples from the Tel Aviv Stock Exchange in the past year

Roast Greenberg

23/03/2022

Wednesday, 23 March 2022, 16:36 Updated: Thursday, 24 March 2022, 11:38

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Sometimes it is only when the tree falls that one can notice how high it was, and so is the diagnosis of the size of the investment bets - even of the institutional investors, who glorify their victories, but take care to keep their losses modest.



In the last two years, the same factors have had a large number of successful investments in the shares of companies traded on stock exchanges around the world, but also investments that have proven themselves, at least for now, to fail, and have wiped out billions of shekels.



Walla!

Money and Maariv Business examined a sample of five failed issues (see table), which alone sent investors (from France) about NIS 1 billion, which reflects an average decline of 52.18% in the share from the first trading day of the companies on the Tel Aviv Stock Exchange, until the last trading day examined.

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This is a small amount of money from the institutional investment portfolio, and yet it turns out that they also have weaknesses (Photo: Walla !, no)

Make a round on the trend

The leader in the decline in the share price, along with the amount of value lost, is the Israeli artificial intelligence product development company "Razor", which was traded at the beginning of the trading day on March 23 this year at a value of NIS 119.3 million.



Its value reflects a decrease of about 77.98% since it began trading in Ahuzat Beit at the beginning of February 2021, when it was traded at a value of about NIS 542 million.

The company even reached a record value of about NIS 651 million within a few days.

But since that peak its stock has started a steady downward trend to its current value.



This is mainly in light of disappointing financial reports, in the framework of which it did not present significant applied progress, and even announced a halt in progress with one of its products, which was assimilated into the IEC.



Razor took advantage of the late uncertainty in the Israeli capital market during the Corona period in favor of its issuance, and some believe that without directing investors' attention to the growth and "dream" companies, it is not certain that its issuance would have been successful.



The term "dream" companies is a nickname for young companies that are high-risk and without significant financial results, which represent the possibility of great success that will boost the value of the company, hence the value of its investors' holdings.



One of the investors in the same dream, which has just come to life in the financial statements, is the insurance company Migdal, which holds 6.18% of Razor shares.



Migdal became an interested party with the company's IPO, and then paid about NIS 30 million, out of about NIS 100 million that Rizor raised in the IPO.

The insurance company then purchased the shares at a price of NIS 12.6 per share, which then represented the company at a value of about half a billion shekels.

Razor's share price was NIS 3.04 as of the day the company's value was examined this week.



Another company whose share performance presented more failure than a dream was Photomain, a company that develops artificial intelligence-based technology in the field of family photos, and deletes about NIS 160.3 million from its value within a year or so.



This is after its share has fallen by 64.7% since its issuance at the beginning of March 2021, when it was traded at a value of about NIS 235 million.

The company managed to hold the dream for a period of about two months and reached a record value of about NIS 253.7 million on May 11, 2021.



But since then the company has started a downward trend, amid a ban imposed by American technology giant Apple on downloading apps in its store, preventing advertisers from using In the information collected from the users, and against the background of financial results that disappointed mainly against the background of deepening the losses.



One of the investors in the company that promised to give life to the memories is the insurance company Harel, which holds 8.77% of Photomain shares, and in the meantime is only experiencing the demise of its investment, which is currently worth about NIS 6.6 million.



Harel purchased 8.42% of Photomin's shares in the last issue at the beginning of March 2021, for which it paid NIS 19.16 million, out of a total of NIS 50 million raised at the time, at a price of 82.97 per share.



It should be noted that for institutional investors these are amounts that make up a fraction of a percentage of the investment portfolios they manage, but nonetheless - it is money of all of us, the public, the same institutional managers, and therefore their investment should be more of a calculated risk and less of a dream.



Capital market officials told Walla!



Money and Maariv Business: "It is true that these are relatively negligible

amounts for the investment portfolio, but it is not certain that this always justifies the gamble.

Contact the underwriters, knowing that the investment may not bear fruit, but their participation in it will allow those institutions to receive allocations from the underwriters for other more worthwhile investment transactions.



It is also possible that these connections, which are woven between the underwriters and the institutional ones, whether professional or friendly, and sometimes even the desire to maintain an open axis for the next workplace, even in companies that received the investment - generate quite a few investments whose failure is known in advance.



" Even the downturn in the investment portfolio is a bit down.The savers' hope is that their CFOs will make as few wrong decisions as possible to steer their investments down, and more successful decisions that will lead the return on investment up.

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Source: walla

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