Sound Management Explains Success of Nice and Equity One

NICE Systems (NICE) is continuing to capture new markets. Its latest deal with Network Rail, the owner and operator of the U.K.’s railway infrastructure, amounts to the big time. Network Rail is responsible for the operation, maintenance and development of Britain’s tracks, signaling system, rail bridges, tunnels, level crossings, viaducts and 17 key stations.

As part of its National Voice Recorder Project, NICE will fulfill phase one of the project that will ensure all interactions between signal operators and train drivers are captured and stored in compliance with strict corporate policy. The system NICE is providing will enable compilation of evidence and information-sharing in the event of a post-incident inquiry. This deal is worth tens of millions of dollars.

NICE, which was recently rated “Buy” by the Bank of America with a target price of $38, is trading at a multiple of 25 for 2006 and 23.5 for 2007. The stock’s premium is due to the company's management, which delivered one of the greatest comebacks in Israel’s -- or any country's -- technology industry. In his review, Bank of America Securities senior equity research analyst Daniel Cummins said, “NICE is well positioned to capitalize on investment trends in converged voice-video data collection and analysis, advanced CRM, compliance and security.” This is the test of a successful manager: take a niche company and give it a leading position in a growing niche. While the stock is a bit expensive at present, I still feel the chances of making a profit are several times higher than those of taking a loss, and this, of course, is not the kind of profit that can be made in an instant.

While we’re on the subject of outstanding management, this would be an appropriate opportunity to mention Equity One Inc. (EQY), which has once again reached an all-time high. On Monday, Equity One announced the appointment of Jeffery Olson, 38, as its new CEO in place of company founder Chaim Katzman, who will continue to serve as board chairman.

Katzman launched the Equity One concept 15 years ago in Florida, which entailed the building of commercial centers with a key leading tenant. He began by using the largest local supermarket chain, Publix Supermarkets, as the anchor in every shopping center that Equity One purchased. The idea was to purchase shopping centers that provided a relatively secure revenue stream on the one hand while containing scope for improvement through renovation and improving the class of tenants on the other. Katzman is now likely to dedicate his time to the activity of Equity One’s parent, Gazit-Globe (GLOB), which is expanding into other countries.

Whichever way you look at it, Equity One is a success story that anyone with a bit of knowledge about the U.S. business world -- and especially the real estate trust industry -- should be able to appreciate. In my book, Chaim Katzman is on a par with NICE CEO Haim Shani and others like him. They are all outstanding managers whose companies are worth investing in because of their personality, management skills, and the value that they create for investors. Take note of the sector Equity One operates in -- the “plummeting” U.S. real estate sector. Note also that since August, Equity One has seen nothing but downgrades, while its stock has continued to climb regardless. Of the 11 analysts covering Equity One, seven rate it “Hold”, three recommend selling and only one rates it “Buy.” The stock started August at $21.5 and ended yesterday’s session at $28. Let no one be in any doubt -- this gain is entirely a management premium.

Tissera Inc. (TSSR) began November at $0.10 and is now trading at around $0.22, a handsome gain on any scale (despite its having previously reached $0.25). I believe the trigger for this gain was provided by online financial and investor relations and financial communications site Shazamstocks.com, which ran a profile on Tissera.

The site aims, quite successfully, to be a spotlight that zooms in on small and neglected companies that have potential or simply are interesting. (It tries to report on unusual situations, and a month ago I saw a reference on the site to one my favorite companies, Harrah’s Entertainment Inc. (HET), the largest hotel casino chain in the world. Harrah’s stock had fallen and Shazamstocks “revealed” this news to its readers.) After reading its profile of Tissera, with its interesting photographs and lucid description of the company’s business, wouldn’t you want to put 10, 20, or 30 cents on the idea?

Tissera is developing tissue regeneration technologies for treating gene deficiencies and diseases, based on a license it obtained from the developers, company chairman Professor Yair Reisner and his team at the Weizmann Institute of Science. It is no less interesting than any other biotechnology company and also has an impressive management team and company board. During the last three days, four million Tissera shares have changed hands, as opposed to the daily average of 175,000. I have no doubt that a lot of casual visitors happened to check out Shazamstocks and decided it was worth investing a few cents in this dream, and when you invest in a company like Tissera, you need to understand that it’s for the long-term. Many investors in the U.S. understand this.

I must, of course, warn readers that Tissera is a company at the development stage, and the stock will respond in accordance with the company’s progress on Main Street. There is always the possibility that it may never even make it to Main Street, so, with all due respect, please be careful and check thoroughly.

NICE 1-year chart:

EQY 1-year chart:

TSSR 1-year chart:

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