Elbit Medical Imaging: One Company, Three Hot Sectors

You can’t imagine how many times I am asked where I can find one company that is a medical diagnostic company, a company that develops stem cell therapies, and one of the leading real estate companies with holdings in Central and Eastern Europe and India? Well actually I have never been asked that question, because it’s such a bizarre mix of companies, but it’s a mix which has proven to be very profitable for shareholders of Elbit Medical Imaging (EMITF).

Elbit Medical Imaging engages in the initiation, construction, operation, management, and sale of shopping and entertainment centers mainly in Central and Eastern Europe, Israel and recently in India. As Roger Nusbaum discusses the appeal of international real estate, Elbit Medical’s portfolio maybe enough to justify the $1.1 billion market cap the company sports.

As CEO Motti Zisser says,

“After close to two years of thorough study of the Indian market and building the team and infrastructure of our organization in India, we are now moving at the pace we have been accustomed to throughout the years of our operations in Central and Eastern Europe. We are confident that due to the needs and size of the Indian market, our activities in India will prove to be as successful as our European activities have been and more.”

For investors who want some emerging market real estate exposure, this is a great company to consider for investment, as its track record proves.

But there is much more to Elbit Medical than an intriguing real estate portfolio. The company also owns very large stakes in two of the most exciting private (though an IPO is definitely in the cards) companies Israel has to offer.

Insightec Ltd., develops a product that combines MRI technology with focused ultrasound in order to treat serious diseases such as bone, liver and brain tumors, without the invasive procedures that are currently used. Elbit Medical owns over 50% of Insightec, and some analysts think that an IPO valuation of close to $1 billion is a very real possibility. That would give Elbit Medical approximately $500 million, just in Insightec.

The other private company is Gamida Cell. Gamida Cell is developing a line of cell therapy products for the treatment of such diseases as leukemia and lymphoma. It’s expected that it will begin marketing this by mid-2009. With all the attention stem-cell companies are getting as well, Elbit Medical might be sitting on a position worth hundreds of millions of dollars.

A few years ago, the magic word on Wall Street was finding “synergy.” There isn’t a lot of synergy between Elbit Medical’s businesses, but that doesn’t mean that there is no value here. Though actualization of its holdings is another year or so in the future, if it works out, and if you add up the sum of the parts, the stock appears to be trading at cheap levels.

Disclosure: The author’s fund is long EMITF as of June 19, 2007.

EMITF 1-yr chart