Elan proves to be unlikely saviour for Hibernian fund in Rehab race

With just two months of the Rehab Great Investment Race left to run, Hibernian remains well clear of the field despite recording its first monthly loss in the contest. Hibernian's fund lost 0.4 per cent of its value in January, leaving it worth €182,314, according to race monitor Mercer.

However, this remains well ahead of the next-placed contender, Bank of Ireland Asset Management, which ran up an impressive 14.4 per cent gain last month to take its fund to €129,285.

"We didn't do a whole lot in January but equity markets generally were down around 1.5 per cent," says Hibernian's Mr Martin Nolan. "Toward the end of the month, we realised that extra action was required."

The stock that proved a surprising saviour for Hibernian was Elan. Trading opportunities thrown up by the scale of its fall allowed the fund to make gains of around 1.5 per cent and cut its earlier losses.

Others did not fare so well with the battered pharmaceutical stock. Pioneer Investment Management, which lost 2.1 per cent over the course of the month, held Elan in three of its funds and also owned shares in Tyco, another victim of "Enronitis".

Allied to the falls in global equity markets, this left Pioneer's fund in fifth position overall with a current value of just €93,252.

In the contest, six teams of fund managers are pitted against the market and each other for one year. The aim is to make as much money as possible, with all profits going to the Rehab Group.

Aside from Pioneer, two other funds remain in the red. Despite gaining 1 per cent over the month, Irish Life continues to bring up the rear with a fund worth €90,020, or 10 per cent less than at the outset. Setanta, too, remains in negative territory with 6.4 per cent less than it started with.

Fund manager Mr Gary Connolly admits that it is unlikely the fund will make it back to its starting point. "We would need to have a serious rally in the market between then and now," he said. "There are long odds against us clawing back 8 per cent or so between now and the end of March but things can change so rapidly. You can't rule it out."

Overall, however, the €600,000 the participants started out with is now worth €695,633, thanks to the efforts of Bank of Ireland, Friends First and Hibernian, which have benefited from Irish stocks.

Friends First logged gains from its sale of shares in Kerry and Irish Continental Group to leave it 5.6 per cent ahead over the course of the month and in third position overall. Meanwhile, Bank of Ireland sold shares in McInerney last month to leave it holding Riverdeep, Independent News & Media and Anglo Irish Bank heading into February.

Though resigned to taking silver medal at best in the overall race, Bank of Ireland fund manager Mr Chris Reilly believes he can make some more money for Rehab before the March end date. "I'd be disappointed if we didn't," he says, adding that he believes the shares he holds still have "a little bit of oomph in them".

Hibernian is also bidding to add to its tally and is now invested in technology stocks. "We're not relaxing yet," says Mr Nolan.

But others are less sanguine about the prospects for markets in the weeks ahead. "The issue of accounting standards remains a worry internationally," says Friends First's Mr Gerry Mangan, while Ms Anne Barker of Pioneer describes markets as "looking untrustworthy".