Tower Semiconductor Selloff Should End Soon

Includes: ALMC, TSEM
by: Shlomo Greenberg

I’ve decided to dig a little into Tower Semiconductor Ltd. (Nasdaq: TSEM) to see what’s going on over there. I will begin by saying that there is nothing wrong with the company. It will meet its guidance and continue to generate impressive stories, one of them quite soon.

As I’ve said many times before, the company’s present circumstances are quite interesting for anyone who wants bargain semiconductor stock with a strong future. Unfortunately, the share has been marking time (and even retreating) for longer than I thought. The share is under pressure from sales by an investor in the US, which could mean one of two things. Either US institutions, which have held shares for a long time, have decided to sell them for reasons of their own; or someone is coordinating sales in New York in order to buy them more cheaply in Israel.

For example, I saw that Alliance Semiconductor (Nasdaq: ALSC) dumped 2.15 million Tower shares on the market during the first half of 2006. Alliance Semiconductor is one of the oldest shareholders in Tower. Other longstanding shareholders also decided to sell their shares in the company, uninterested in its improvement; institutions sometimes act oddly.

There is another interesting and unique phenomenon at Tower: the largest trading volume in its stock is occurring on the Tel Aviv Stock Exchange [TASE]. In other words, Israelis are buying and Americans are selling. This raises suspicion that someone is trying to buy shares on the TASE following the drop in Tower’s share price on Nasdaq. I don’t think this is a coincidence. If you ask me, the sell-off will end soon. But soon on the stock market is a relative concept.

Published originally by Globes [online], Israel business news - © Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.

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