Ep 128: Justin Borus - Israel's once in a cycle opportunity
Sep 26, 2022
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Justin Borus, Founder and CEO of Ibex Investors, discusses the opportunities arising from the revaluation of technology companies, the strategy and outlook for the Ibex Israel fund, and the trends in companies and technologies emerging from Israel. Justin highlights the minimal impact of inflation on the fund's strategy and the upcoming shift towards private companies in the next 6-18 months.
The recent revaluations of fast-growing technology companies globally have created attractive opportunities for the Israel fund, with significant declines in publicly listed companies and slashed valuations in the private side.
Despite the challenges and declines in the Israeli market, there are still attractive valuations and potential venture capital-like returns available, particularly in growth companies with compelling opportunities in sectors like enterprise software, cybersecurity, medical devices, and agriculture.
Deep dives
Recent revaluations and declining values of fast-growing technology companies
In this episode, Justin Borus discusses the recent revaluations and declining values of many fast-growing technology companies globally. He believes this presents a unique opportunity to enter these companies at attractive valuations. In Israel's publicly listed universe, half of the companies are down over 50%, with 30% down over 70%. On the private side, many VCs have stopped making new investments and are focused on existing portfolios. Despite popular belief, Israel is not immune to the sell-off. However, Justin states that bear markets provide opportunities to make fortunes.
Investment performance and outlook in the Israeli market
Justin discusses the performance of the Israeli strategy in the last six months, highlighting that while growth assets have suffered due to rising bond rates, IBEX and the Israel strategy have fared better than comparable investments in the US. The publicly listed universe in Israel has seen significant declines, with half of the companies down over 50%. On the private side, valuations have been slashed, and even top-tier companies may need to seek funding in the coming months. Despite challenges, Justin remains bullish on the investment opportunities in the Israeli market, citing attractive valuations and potential venture capital-like returns.
The investment strategy and opportunities in the Israeli market
Justin explains the investment strategy being pursued, including transitioning to growth companies with attractive valuations. This includes selling cash collateralized puts on publicly listed companies with high implied volatility. On the private side, the focus is currently on the public companies due to compelling opportunities. However, in the future, the private side is expected to present more appealing opportunities as valuations continue to decline. Justin highlights the shift towards enterprise software and cybersecurity in Israel, while also being open to investments in other sectors such as medical devices and agriculture. He emphasizes the strong growth potential of Israeli companies and the significant opportunities available at current valuations.
Justin again joins the podcast to provide an insight into the current strategy and outlook for the Ibex Israel fund considering the recent economic environment. Justin is the Founder and Chief Executive Officer of Ibex Investors, an investment firm that focuses on niche and differentiated strategies, primarily through Israeli start-ups and growth companies. Prior to Ibex, Justin worked at Bear, Stearns & Co. Inc, while also serving on the Board of Directors of various non-profits.
During the episode, Justin and David discuss the recent revaluations of fast-growing technology companies around the world and how this has presented great opportunities for the Israel fund. Justin explains the minimal impact that inflation has had on the strategy due to the pricing power that its companies possess. He also compares the current outlook for the public and private markets in Israel, emphasising the fund’s recent focus on publicly listed companies that have had significant revaluations. Justin then highlights the tremendous opportunities that will arise on the private side in the next 6-18 months, when the fund plans to shift its focus toward these companies.
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