Elan getting right blend of US and European investors

Elan duly produced an impressive set of results this week, with the prospect of better things to come, as chairman Donal Geaney said he was comfortable with consensus forecasts for 2001 of $1.89 a share. Promised earnings growth of 30 per cent would represent a significant increase on last year. Apart from the continuing good results and Elan's transformation into a fully-fledged pharmaceuticals group, the past year has also seen a significant change in the group's share register, with the dominance of American institutions sharply reduced.

Elan has been making a big effort in the past year to diversify its shareholder base and has been very successful, to the extent that European investors now account for 25 per cent of the shares, compared to just 7 per cent a year ago.

By any standards that's a dramatic shift in the shareholder balance and is partly attributable to Elan's inclusion in a few key MSCI and FTSE indices. It seems the ideal balance for Elan is for about a third of the shares to be held in Europe with the balance held by American investors.

Given Elan's dominance of the ISEQ Index - almost 20 per cent of the Dublin market - and its inclusion in MSCI and FTSE indices, even the Irish institutions who for years dismissed Elan as an investment have now taken small stakes.

If only they had shown some ambition and bought Elan when it was offered to them years ago when Don Panoz and Donal Geaney did the rounds, it would be the Irish institutions who made the financial killing and not the American investors who backed the company.

But amazingly, despite Elan's performance and its presence in the various indices, one Irish institution still remains unpersuaded of Elan's attractions. Bank of Ireland Asset Management (BIAM), we hear, has steadfastly declined to put its money into Elan and is still absent from the register.

When BIAM people do the rounds of their pension fund clients, maybe trustees might ask them to explain this particular investment decision.

Meanwhile, that $1.89 forecast accepted by Donal Geaney may be on the conservative side, with Goldman Sachs analysts suggesting that the end-year outturn may in fact be €1.93 a share. Goldman have also slapped a $70 price target on Elan shares.