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McClatchy-Tribune  09/02/2014 12:01 AM ET
An eye for the next Mobileye [Globes, Tel Aviv, Israel :: ]

Sept. 02--Many investors worldwide tend to employ what is sometimes referred to as the "Midas strategy." The idea is to mimic the investment strategies of the great investment "gurus," who have a reputation for possessing a "golden touch." In Israel, perhaps there are no gurus with the stature of Warren Buffett, but the major automobile importers, or most of them, have that same "Midas touch" reputation, which has helped them fit in well over the years in very high places in the net-worth and liquidity rankings among Israel's businesspeople.

This reputation was reinforced by investment in Mobileye (NYSE: MBLY), in which many senior auto-industry executives participated from the very early stages. These investments yielded profits of hundreds of millions of shekels for investors like Shmuel Harlap and Gil Agmon, who waited until the IPO last month. But other auto-importers in the sector, who sold their shares at earlier stages, earned massive returns on their investments as well.

Mobileye is just one example. In recent years, auto-importers have invested in numerous start-ups and technology companies, most of them still operating under the market's radar but which are, in the long term, likely to have serious potential -- in the auto-industry and in other sectors as well. On behalf of our readers who may be interested in employing the "Midas strategy," we have conducted a survey of the landscape, and brought a few of them to light.

First, a disclaimer: not all the following investments will turn to gold, and the perception of risk among wealthy businesspeople with high liquidity, such as auto-importers, is different from that of the small investor. In addition, the IDB Holding Corp. Ltd. (TASE:IDBH) investment scandal, for example, illustrates the fact that one must not only know when to buy like the "major players," but also when to sell like they do.

BrightWay Vision

Lubinski is in, is Allied next?

BrightWay Vision was founded in 2010 as an Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) spin-off, and its product is intended for a similar market to that of Mobileye in the automotive industry, though the technology is very different. Both are hazard-avoidance systems for drivers, but BWV's system is based on technology that was developed for the battlefield and is able to identify objects during night driving and in inclement weather (rain, fog, etc.), with a range of up to 250 meters. Considering the fact that most road accidents take place at night and in inclement weather, the potential of this system is clear.

An important side-note: what will determine the success of the system in the commercial market is the final unit price to the manufacturer and the consumer. In recent years, night-vision systems have come onto the market, and they are still available as an optional extra, primarily on expensive luxury vehicles. These options cost thousands of dollars, unlike Mobileye's system, which has a manufacturing cost that is smaller by a few degrees of magnitude. If the cost of this technology is reduced, it is likely to become "the next big thing."

Either way, the automotive industry is already expressing interest in BWV's technology. According to the company, "After a development-phase of a few years, the concept-development phase has been completed and a sample system for vehicle use has been built. The system was successfully tested by leading auto-manufacturers, including General Motors, Volvo, Peugeot, and others. The company is now continuing with detailed prototype planning."

The company further said, "Seed funding was invested in 2011 by major local auto-importers." If this reminds anyone of Mobileye's fundraising model, it is likely not accidental. So, who are the investors? One of the first companies to join the circle was Lubinski. Lubinski has declined to publicize the size of its investment, but has stated that BrightWay Vision's technology answers a real industry need and been very warmly received by auto-manufacturers. Rumor in the auto-industry has it th

 

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