Fidelity Sells Next Vision Shares, Israeli Investors Buy Amid Market Panic
Translated & summarized from Bizportal by baba
Next Vision's stock plummeted 12.6% in a record trading day after Fidelity sold shares worth 1.3 billion shekels, triggering market panic. While foreign investors were net sellers, Israeli institutional and retail investors bought heavily into the sell-off. The sale occurred amid a broader downturn in the defense sector, though Next Vision's stock still trades at a high valuation relative to peers.
The story in 6 lines · by baba
- Next Vision's stock dropped 12.6% in a single day, a record loss, on record trading volume.
- Fidelity sold approximately 1.3 billion shekels of Next Vision stock at a 6-7% discount.
- Foreign investors were net sellers of Next Vision shares, offloading 247 million shekels.
- Israeli pension funds, insurance companies, and mutual funds were major buyers during the sell-off.
- The defense sector is experiencing negative sentiment, with the defense index erasing all gains.
- Despite the fall, Next Vision's stock valuation remains high compared to global defense companies.
Next Vision's stock continued to decline following an unprecedented trading day, losing 12.6% on a record turnover of approximately 507 million shekels. This drop, significantly larger than previous sell-offs, occurred despite management's attempt to stem the panic by announcing a new $24 million order. The market's sharp reaction is attributed partly to Fidelity's sale of shares, which occurred at a 6-7% discount but triggered a nearly double stock price drop. This sale comes amid a negative sentiment in the defense sector, with the defense index erasing its entire gains since its inception.
While Fidelity's large-scale sale might signal a negative outlook on the sector, analysts suggest caution in interpreting it as a definitive statement. For a firm as large as Fidelity, the sale, though substantial in local terms, could represent a minor portfolio adjustment. The article emphasizes that every transaction has two sides, prompting an examination of who bought the shares.
Data reveals that foreign investors were net sellers of approximately 247 million shekels. However, other investor groups largely bought into the sell-off. Pension and insurance funds purchased a net of about 116.7 million shekels, mutual funds bought 50.2 million shekels, Israeli retail investors acquired 33.9 million shekels, and Israeli corporations bought 31.7 million shekels. Portfolio managers also added 16.1 million shekels in net purchases, with smaller foreign retail investors and ETFs also showing buying activity.
Further analysis indicates that foreign selling of Next Vision and other defense stocks is not a new phenomenon. Over the last 17 trading days, foreign investors have been net sellers on 10 days, totaling about 348 million shekels. Even before Fidelity's large sale, foreign net sales exceeded 100 million shekels in that period, suggesting Fidelity's sale amplified an existing trend rather than initiating it. In contrast, local investors, particularly pension funds, insurance companies, and mutual funds, have shown consistent net buying over the same period.
Despite the recent sharp decline, Next Vision's stock still trades at a high valuation compared to local defense companies, with a price-to-earnings ratio of around 40. This valuation remains significantly higher than many global competitors, particularly in Europe, which have seen their stocks drop over 50% from their peaks and now trade at lower multiples.
