Value-driven in Europe
As in the U.S., there was little in the way of momentum investing in Europe last year, with value investors picking their shots to provide a decent 2004. This year looks to be more of the same, promising good returns for investors who choose the right companies.
Indeed, the European indices showed a rare turn as both outgrew their U.S. counterpart in 2004. The BioCentury London Index was up 27% on the year, while the BioCentury Europe Index was up 21%. In comparison, the BioCentury 100 Index, which is dominated by U.S. companies, was up 10% (see "Historical Index Performance").
The "right company" theme also may carry over into the IPO realm, where stock pickers may be willing to bet on new names as long as they are more mature plays that can fetch more robust valuations than are being seen on average in the U.S.
The last time Europe saw real momentum investing was in 1999-2000 before the markets peaked in March 2000. Since then, the investing has tended to be stock specific and value driven.
The main driver for the London group was Celltech Group plc (Slough, U.K.), which in May received an acquisition bid from UCB Group (Euronext:UCB, Brussels, Belgium)(see BioCentury, May 24). The news pushed the BioCentury London index up 14% on the week - a gain that investors built on after Celltech's listing disappeared on Aug. 10. Celltech was the largest company in the London index of 14 companies.
The European index did not rise in unison that week, gaining only 1%, although it closed the year up 9%