The exit of Greece from the European Union (E.U.), which is appearing more likely, could start dominoes falling and lead to a collapse of the union. Given most of our European holdings are global British multinationals, they are somewhat insulated by the short-term impact of a Greek exit, as we noted last week.

But we should consider how investment opportunities on the Continent might change if the E.U. collapses.

The extreme nationalism the E.U. was designed to eradicate has been on display for months in the negotiations with Greece. And the discussions have degraded to school yard type taunts (the lowest point was Greece demanding Nazi-era reparations, and German ministers dismissing Greek negotiations as a Trojan Horse) even as the economic fate of millions hangs in the balance. Where are the adults, I keep asking myself?

Sure, one can go back and blame bad governments, bad bankers or bad people for the 2008 Financial Crisis, but playing the blame game with 20/20 hindsight doesn’t help anyone.

In fact, what bothers me the most about how European leaders have managed this affair is their moralizing about Greece’s predicament. Greece wasn’t on particularly firm footing when it was hurt by the biggest global economic crisis in the last 100 years that the world is still struggling to recover from.

Not since the Great Depression have so many in Europe been unemployed or impoverished. With unemployment levels of 20% and 50% or higher for the young in various parts of the E.U., it’s clear that without leadership the future hopes and economic prospects of Europe will darken.

And this is not an isolated affair. US Treasury Secretary Jacob Lew in late April has warned that global economies could be hurt if European Union negotiations on more financing for Greece fail.

Further, the fact that the E.U can’t seem to fix the problems of one of its smallest members doesn’t inspire much confidence. Can it handle its stagnant growth problem? What if a larger member falls into trouble in the future? Winston Churchill, among others, said: “The measure of a civilization is how it treats is weakest members.”

If economic progress in the E.U falters, other members might view an exit as preferable to facing endless bureaucratic infighting, character assassinations, recriminations, delays and more delays that Greece has had to face.

Arguments by E.U. leaders that no other countries will exit the union are flat-out wrong. Italy’s debt stands at 132% of GDP and Portugal’s is at 128% of GDP. If efforts to revive the regions’ economy with stimulus fail, these debt levels could easily become a lot worse and force their exit.

Even the United Kingdom is mulling over the idea. Re-elected last week, UK Prime Minister David Cameron is drawing up plans to bring forward an in/out referendum on Britain’s membership of the E.U. by next year.

Our Advice

So we have advised investors that want to play Europe to invest in globally diversified British multinationals, as there is some insulation from the volatility and havoc that a potential Greek exit would cause.

In the long term, those countries that exit the Eurozone may prove to be better investments as their currencies will initially (most likely) be weaker than the Euro and as such their products will be more competitive around the world.

While it is our hope that the European Union will be able to resolve its impasse with Greece and enjoy a strong economic recovery – like the Gold Standard – we could well be at the beginning of the end of yet another well intentioned economic union.

Portfolio Updates

The recent win by the Tory part in the United Kingdom is good news for British energy stocks. In September 2013, former opposition leader Ed Milliband had pledged to freeze energy bills into 2017 if he was elected, which would have cost the British energy industry billions. The election win of David Cameron has lifted this price freeze concern – as the Tory party has always been significantly pro-energy.

In fact, in the last month, British utility National Grid (NYSE: NGG) has been up 5.13% as a result of speculation that the Tory party would win – even as the margin was largely debated.

A Conservative Holding, National Grid is one of the world’s largest energy utilities. Created in the mid-1990s when the UK broke up its utilities to create competition, National Grid owns the high-voltage electricity transmission system in England and Wales and operates the system across Great Britain. It also owns transmission lines in parts of Europe.

It owns the high-pressure gas transmission system in Britain, as well as electricity transmission systems in the northeastern U.S. At a $52.58 billion market capitalization, National Grid is nearly the size of America’s biggest utility, Duke Energy. It’s also one of the world’s largest owners of the wires that deliver electricity to customers, which makes its earnings steadier. NGG is a Buy up to $74.

GIE aggressive Holding PDL BioPharma (NSDQ: PDLI) reported a solid first quarter with earnings of $84.5 million, $0.50 per share, up $72.9 million or from $0.44 per share last year. The increase was driven by increased royalty revenues from its patents to other pharmaceutical companies like Roche Holding and Novartis.

Total revenues increase 9.4% to $149.7 million with most of it coming from its royalties with a 10% increase to $127.8 million.

During the quarter, PDL was able build up its cash stockpile to $418.9 million, compared to $293.7 million. The increase came from a March 2015 Term Loan of $100 million and cash generated by operating activities, minus dividends paid to investors during the quarter. Its annualized dividend of $0.60 per share equates to an annual yield of 9.2% at current prices.

Posting solid growth in the first quarter, PDL is a Buy below $14.