Angry in the Great White North
Another curious example of income trust trading, hitting close to home
Saturday, December 10, 2005 at 10:00 AM

Read other posts by Steve Janke published by the National Post
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A big hat tip to MK Braaten for this one.

The day before the November 23rd income trust announcement by Finance Minister Ralph Goodale, the shares were worth $10.80, and traded 5,714 units.

The day of the announcement, but before the announcement was made, the shares closed at $11.00, but were trading at an amazing 203,953 units!

The day after the announcement, the price continued to trend up, closing at $11.02.

This past Friday, the unit price closed at $13.25.

The trust fund in question? Medisys, the health care and pharmaceutical company run by Paul Martin's personal physician, Dr. Sheldon Elman.

Here's a visual representation of the activity. Look at that volume spike just before the announcement and the subsequent unit price racing up.

It's quite the turnaround. This time last year, the shares were trading at $4.25, with an expectation that in a year it would be trading at $4.00. This researcher had some harsh words:

Surprisingly weak quarter. Punctuates why Medisys is not ready to be an income trust.

The recommendation? Sell. The only hope for Medisys? More for-proft clinics opening nation-wide to improve cash flow.

In fact, in 2005, from a peak $15.21 in the summer, Medisys was on a downward trend, dropping 30% of its value until late November, earning another negative report on November 21, just two days before the income trust announcement.

I can only assume no one from Ralph Goodale's office called Jennings Capital Inc.

Whoever decided to ignore that negative report and picked up an astonishing 200,000 shares really picked exactly the right time.

I bet Dr. Elman will have a big smile on his face when Paul Martin comes for his next visit.

By the way, who owns Medisys? Well, when they converted into an income trust in November 2004, 45% of the issued and outstanding shares were owned by directors and senior management at Medisys.

Who are these people? One is former Liberal Senator Leo Kolber. Leo Kolber has donated nearly $60,000 to the Liberals since 1993, including $17,500 in 2002 through his company 87215 Canada Ltd.

Ironically, in his autobiography Leo, A Life this member of the pro-business wing of the Liberal Party speaks of his disappointment at the decline in business ethics.

I guess he must still be disappointed.

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