MDY Healthcare

Using public information, how do you receive a return of up to 40% from an investment at 50p a share? Take a look at AIM-listed MDY Healthcare for more information.

For those of you with long memories, this was the old syringe developer Medisys. Over several years it spent millions on 'product development' but returned little to shareholders – other than a slump in the share price. Wind the clock on and MDY Healthcare is now in a position to provide a useful return.

Aided by new management, including ex-banker Grahame Cook and medtech specialist Martin Hunt, the business is now worthy of closer attention. Last month it unveiled the disposal of Medivance, one of its two remaining healthcare investments.

US giant C.R. Bard is paying $250m for the temperature management specialist, which equates to up to £13.125m for MDY, or more interestingly 73p to 77p a share. Costs have been cut and there are debts in MDY of £1.65m, but there also remains a 14.5% stake in AIM hopeful Stanmore (an orthopaedic business).

MDY has an army of retail investors from its old Medisys days, but in the last announcement the board stated its intention of 'setting out our strategy for the company and the use of the balance of the proceeds'. Though it is not yet clear how much may be returned, I can see a return of at least 70p being fairly realistic. Final completion of the sale is still due, so the stock is not without risk, but on balance I think it's worth a gamble.