Top Image Systems Inc fka TISA

[midastouch017]

Thu: The 3,600% club
Top Image, G. Willi-Food, Mind CTI, and Better Online Solutions - Any one of these shares could give huge returns over the next three years.
Shlomo Greenberg

I’ll discuss four shares that have been falling consistently for the past year: Top Image Systems (TiS) (Nasdaq: TISA), G. Willi-Food International (Nasdaq: WILCF; TASE: WLFD), Mind CTI (Nasdaq: MNDO; TASE: MNDO), and BOS Better Online Solutions Ltd. (Nasdaq: BOSC; TASE: BOSC). The aggregate market cap of these four companies is now $143 million, and that’s after Mind CTI and G. Willi-Food rose sharply. The four companies have a total of $75 million in cash, so their real value at present is around $70 million. All that know-how, technology, and so forth -- it’s a joke, to say the least. If serious investors could buy a company like Mind CTI, which has $45 million in cash, for $65 million, they’d jump at the chance. Any child knows, however, that when people want to buy a company whose shares are in a state of depression, they can’t get the company at the market value; they have to pay a lot more than that.
All four of these companies have sales and are growing, and three of them are making a profit. I’ve no doubt that BOS is about to go from loss to profit, but the fact that they are profitable and growing doesn’t change what I want to say. I want to talk about opportunities, herd-like behavior, various gurus, and the differences between reality and imagination that result from the substantial differences in thinking between Wall Street and the normal world. I took these four companies merely as examples. There are surely 10-15 more just like them among the Israeli shares traded on Wall Street, all of which represent companies with sales, growth, and profits. What’s most important, though, is that all of them ran - and survived - the gauntlet of the 2000-2002 crisis, and are now successfully leaving it behind.

Companies that survive a crisis like that, and whose product(s) have survived, and are still in demand in the market, are of interest, or should be, to every investor looking for companies with potential. If we compare each of these four companies with Silicom Connectivity Solutions Ltd. (Nasdaq: SILCF), for example, we discover that the only difference is that Silicom’s share has risen almost 200% since early 2005, while the shares of the other four have fallen. Mind CTI has tumbled 48%. G. Willi-Food is at exactly the same price it was at the beginning of 2005, but it reached over $10 in March 2005, which means that the share is now 60% below its price back then. Top Image is also at exactly the same price as it was at the beginning of 2005, while BOS is 34% lower than its price at the beginning of 2005. Furthermore, since the low point of October 2002, Silicom has zoomed 36-fold. Mind CTI has gained 429% since then, Top Image 750%, and G. Willi-Food 400%, while BOS has even fallen since October 2002. All of this, mind you, has been adjusted for the sake of comparison.

Other than the difference in fluctuation, all four companies are similar. You’ll find exactly the same things in them that you found in Silicom, which gives rise to the question -- why Silicom? In my opinion the reason likes in the totally different thinking on Wall Street and on Main Street. Let’s compare for a minute Silicom with Top Image. The two companies are even similar in market cap. Silicom is currently worth $30 million, while Top Image is worth $27 million. As of the end of 2005, Top Image had sales of $16-17 million, and was breaking even. Top Image has $10 million in the bank. Silicom has less than $10 million in sales, and is also breaking even, and moving to profitability. Silicom has less than $2 million in the bank, and is therefore busy now raising money, which Top Image did six months ago. Since 2003, the two companies have shown the same fine progress in their business.

All five of these companies are on my big potential list. The fact that all the world’s markets rose between October 2002 and March-April 2004 can explain why every one of this quintet rose nicely until March-April 2004. But nobody in the world can explain to me why Silicom has taken off like a rocket since then, while the other four have all plunged. If what happens on Main Street really affect what happens on Wall Street, then Mind CTI, for example, should be traded at five or six times its current value, or at least, its rise between October 2002 and now should be no less than that of Silicom. That’s not what happened, though, because there’s no connection between the two streets.

There are two worlds here, which look similar, but in reality are completely different. For example, how can you explain the fact that at the beginning of 2000, when a few people came from industry and trade, from Main Street, and said that share prices didn’t reflect anything real, but were terribly inflated, Wall Street laughed at them, and said that they had no idea of what they were talking about?

When the same people came to Wall Street in late 2002, and explained that share prices were far too low, the experts dismissed them again. This actually explains why Seinfeld - a TV show that was famously "about nothing" - was so successful, while Mind CTI and Top Image are not. No, I say, there’s no reason that you can point to. The rises are for no reason at all, and so are the falls. Ladies and gentlemen, Wall Street is a case of Much Ado About Nothing.

My conclusion from all this is that if you believe that Silicom has potential, or Top Image, or Mind CTI, there’s no doubt that you also have to believe in the others, because the chances that one of them will rise 3,600% in three years are the same. That’s why I’m keeping all of them, because, as of now, they all justify my judgment in late 2002. I only hope that the four that haven’t yet provided a 3,600% return do it soon.

Published by Globes [online] - www.globes.co.il - on January 12, 2006

http://www.globes.co.il/serveen/globes/docview.asp?did=1000050059&fid=1052

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