I've managed to find a reference to the Blue Pennant on P.39 of James Taylor's book, ELLERMANS. It was whilst Ellerman was watching one of his ships berthing in the Langton Dock, Liverpool, in 1904 that he decided to have a uniform livery for the flags and funnels of the various shipping companies he had acquired, and which had now become the mighty ELLERMAN conglomerate.
He was attracted to the funnel colouring of the Alexandra tugs shepherding his ship into its berth-light buff, surmounted by a black top with an intervening narrow band of white. His business in the ship completed he called at the office of the tug company and they expressed no objection to his copying their funnel colouring. Thus on 10th October 1904 the new colouring was made uniform for the Ellerman fleet, and it also became the regulation that over any existing house-flag all ships would in future fly a blue pennant with the letters J.R.E. in white, an identity which Ellerman ships have made known in world ports.