Amazing Profits

by | Sep 5, 2003 | Archives

Jyske Bank's seminar was held at the Skodsborg Kur Clinik outside of Copenhagen, a wonderful old spa by the sea. The week we were there included good walks and enjoyed some afternoon summer ocean storms. The food was magnificent, the building truly wonderful and the meeting of friends from around the world and being with them a great pleasure.

Lord Rees Mogg, a member of the British House of Lords was one of the speakers. He talked about how the new EU constitution, which has just been drafted, will make Europe just like the U.S., robbing each country of its sovereignty. Most people, even in Europe, don't even know how far reaching this document is and what a profound change it can have on every country in Europe.

The gala dinner at the end of this seminar is always a great treat with entertainment from the Royal Danish Opera. Fortunately I was seated to the right of Lord Rees-Mogg so this dinner was more than entertainment. I learned a lot. He is a genuine, learned man with an incredible grasp of history. The last time we spoke Lord Rees-Mogg was Sir Rees-Mogg and that's been nearly 20 years. His mind is still sharp as a tack and we talked through the evening about how the U.S. government's debts and commitments are probably unsustainable. Most investors know that the U.S. federal budget deficit could hit 500 billion in 2004, the highest ever and up 60% from what it was predicted five months ago.

Federal administrators who defend this say it is only 4.6% of GDP and that the U.S. federal debt is sustainable. However when Rees-Mogg added in stated debt and pension and other liabilities and potential social security and Medicare costs, the figures become unsustainable.

So what happens if the least stable government in the world defaults on its debt?

This is why I have been recommending diversification into shares in other countries such as Instrumentarium. This company is listed on the Finnish stock market and at Nasdaq (code INMRY). The share price is in the $35 range and has risen steadily over the past years from $10. The company manufactures and sells broad lines of anesthesia, critical care and specialized x-ray equipment. General Electric and Instrumentarium entered into combination agreement for GE to acquire the company and approval is still being sought from the SEC and by European regulators.

Instrumentarium's interim report for January-June 2003 shows that the company's principal activity is the development of medical technology. Operations are carried out through the following divisions: anaesthesia and critical care equipment: supply of anaesthesia and intensive care equipment, systems and services; Medical equipment and supplies: diagnostic imaging equipment, medical and dental x-ray systems, dental hand instruments, hospital and nursing home furniture, operating tables, delivery beds, distribution of medical and laboratory equipment; Optical retail: sale of ophthalmic products and provision of special services. Spacelabs medical inc. (usa) was acquired from GE in 2002. Anaesthesia and medical care accounted for 72% of 2002 revenues; Medical equipment, 19% and optical retail, 9%.

What attracted me from a value point of view is the low PE ratio of 19.9. The Morgan Stanley Capital Index Health Care & Services Universe is 56.9. Cash to book value and price to cash flow are also way below the MSCI benchmarks. What really captured my attention is the whopping dividend yield of 13.24%. The average in this sector is 1.21%. I also like the low debt to equity ratio of 25 (the benchmark is 24). Based on these value factors this is a share to review and keep an eye on for its growth and income potential.

Come to North Carolina and join Thomas Fischer (Jyske Bank) and me to learn more about how to survive the U.S. debt and cash in on the Wellness Revolution, how to invest in value shares and enhance wealth through choosing the correct currencies. For details go to

Until next message, may all your investments be well.