The company owns many industrial parks – a total of 743K sq. meters, in inflation-adjusted long-term contracts, with an occupation rate of 96%, which produced for the company an income of 330 Million Shekels in 2011.

In the residential sector, the company finished selling all units in two projects it had, and started selling a new project. From these sales the company received 5.1 Million Shekels in 2011.

The company has very interesting assets:

1. Haifa Matam Park: Home of Intel, Microsoft, Google, Elbit, Phillips and many other high-tech companies. It contains 194K sq. m. rental space of which 145K sq. m. are office space. The occupation rate of this asset is 97%. This assets gives a return of 8.4% on its value, which was calculated as 1,088,497K Shekels, almost one fourth of the company’s long term assets.
2. Herzlya North: Home of more hi-tech companies, one of them Microsoft. It contains 114K sq. m. rental space of which 44K sq. m. are office space. The occupation rate of this asset is 98%. This assets gives a return of 7.8% on its value, which was calculated as 721,160K shekels.

Overall, the company’s assets give a return of 8.6%, on assets valued at 3,231,870K Shekels, with an occupation rate of 96.5%. Pretty nice.

The company is also developing a number of projects, extending the Herlyza and Matam parks and building a full hi-tech park in Beer-Sheva similar to the Matam park. From a presentation to investors, the company is building 266K sq. m. more of office space that will be available for rent in the future (2-3) years.

The company’s stock price has grown 21% since 2000. It had a high valuation in 2006 of 1000 Shekels, from which it went to 410 Shekels in the hysteria of the sub-prime crisis. Now it hovers around 800, going up and down as the winds of the stock exchange carry it, with no real direction.

The stock’s behavior can be expected from how the company has operated in the last years. The stock’s EPS since 2005 has been a roller-coaster:

Here are some numbers from the latest (2011) yearly statements (all numbers are in terms of thousands shekels):

What I read from these statements is:

1. Consistent cash flow.
2. Lots of assets.
3. In 2011 the company had small income because it paid lots of taxes (I read that in the company’s statements).
4. Many liabilities, but most of them are long term, which will be paid in the next 5 to 10 years. Since the company generated very good cash flow from its rents, I don’t think it will have a problem paying.

Gav Yam has distributed dividends regularly since 2002, even doing so in the height of the real-estate crisis, which didn’t even touch the company:

It is hard to say that there is a trend to increase the dividends, and the company does not have a dividend policy, but since it is owned by holding companies that need the money to pay for their acquisitions, I thinks dividends will continue to flow.

Reading the numbers, Gav Yam does not look like a promising company. But from my point of view, it is. It has great assets, and even greater projects. It has debt, I don’t think they will have a problem serving it, both in the short and long terms.

If you have ideas how to better analyze this company, please commend. I’ll do my best to improve with time.

Disclaimer: I am not a certified investor of any kind. These are my personal views and are solely for informational purposes. The numbers I have provided here were digged up by me from many sources and may be wrong in many places. User discretion is advised. I may or may not own the stocks named in this post. This message will not self destruct in 5 seconds.

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• The minimum salary in Colombia is about $300. Average salary is pretty close to minimum salary. Most of the country still lives in poverty, proud poverty, but still poverty. And yet a simple 2 bedroom apartment (90 sq. meters) in a “good” neighborhood in Bogotá can cost $150K dollars!. In the best parts of the city such apartment can go up to $350K! The price An apartment in a normal neighborhood has doubled in the last 5 years (this is anecdotal evidence, and I’m not taking the time to back this up with real numbers).
• Secondly, the Colombian government is a very, very unstable government. You can have 10 good years and suddenly a new corrupt president rises which steals all the money from the country, sells its body and soul to drugs/guerrilla and all your investments just go Kaput. Colombia’s had very good years recently, and I expect that this will end. The recent city major elections in Bogotá where a left-wing candidate won are not good omens for Colombia

But still, the company has a very good industrial backbone, exports agriculture (bananas, coffee) and services. Since my dad was at a hospital, I had the chance to have a look at the health system, and although it is a private hospital, I was impressed by the level of service, cleanness and equipment. The doctors are considered very good by worldwide standards. It is impressive how at the same time the country is very advanced, with high-level education, health, telecommunications, while at the same time all the streets have potholes, the government steals, it is unsafe to walk the streets at night EVERYWHERE and grabbing a taxi in the street can cost you your life.

My sister (Aida Bibliowicz Feldman) took some photos of the buses in one of the last avenues where there are still buses (about ten years ago a mass transport system based on buses with special lanes, called the “transmilenio”, was created, and it is expanding all the time. On the lines where a transmilenio travels, no bus can travel). I seems Bogotá is a very international city… first a bus to Egypt

then one to Jerusalem

you can also catch one to Rome

or Venetia

and finally, San Francisco

What a country…

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First of all, anyone who invests in the stock market should do his own due diligence and not rely on a simple magic formula. There are no free lunches, and if you want to earn money in the stock market, you have to work for it, just like earning money in any other human endeavour. Secondly, the book just repeatedly explains how the magic formula is better than the market, how it has been better than the market almost always, why it is great, and again and again. After three chapters this became a bit annoying. Third, if you really want to convince me, show me the real data, not just saying that we did such and such research and so on, like in Graham’s The Intelligent Investor and Security Analysis: The Classic 1934 Edition, where real world data is shown all of the time.

Another point, which my father-in-law showed to me, is that the magic formula looks until operating earning and there it stops. While this is good for comparing between stocks, sometimes the really good companies make a LOT of money by managing their taxes in a smart way (google for example, which is said to have saved more that 3 billion dollars on taxes in the last 3 years, paying a VERY low 2.4%! on overseas taxes). But this was expected because the book does very shallow analysis, and doing tax analysis is of course out of the question.

On the other side, for people who have never heard of the stock exchange or how to invent in companies, and how a company is valued, how it earns money, what is debt, in short, people who have never though on the difference between a good business and a bad business, this is a good book. The principles are explained in clear terms that (as the author says) can be understood by a 9 year old child.

On the whole, the book can be read (and this can be done in a very short time), but beware of the free lunch syndrome.

Support my work by purchasing this book from amazon.

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P.D: my position on all Delek Nadlan securities was sold about two months ago because the future became uglier.
P.D.2: this is my private opinion and not any kind of advice to anyone.

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