Storied activist investor Elliott Investment Management is giving energy behemoths a makeover—whether they like it or not.
Shares of beleaguered oil refiner Phillips 66 rose 4.72% today after Elliott disclosed an over-$2.5 billion stake in the company.
Elliott first accrued a $1 billion position in the company in 2023, but is now upping the ante, arguing the oil titan needs a shakeup.
“Phillips has failed to make meaningful progress on its targets,” Elliott wrote in an open letter, published today. “This experience has been frustrating but has clarified the scale of the problem and reinforced the urgent need for the Company to pursue an alternative path.”
That “alternative path” includes Elliott’s demand suggestion that Phillips 66 sells its pipeline business, which Elliott said could be worth over $40 billion on its own, along with a revamp of its Board and executive team, and a general streamlining of its operations.
Elliott’s argument that Phillips needs to pivot makes sense on paper: Phillips shares are down about 11% over the past 12 months, far underperforming the broader market’s gain of roughly 21% over the same period.
Phillips isn’t the only oil company getting a talking to. Earlier this week, the Financial Times reported that Elliott was building a stake in BP and reportedly urging the petro giant to focus on its core oil and gas business, as opposed to broader green energy products.
Tough love
Elliott, which is operated by billionaire Paul Singer, may only have a minority stake in these companies, but its influence is not to be underestimated. The hedge fund has mounted a slew of successful activist campaigns in the energy industry over recent years, including at Suncor Energy and Hess.
Activist investors take a stake in beleaguered companies that they believe need an overhaul of corporate strategy and governance, and aim to profit from the turnaround. These are different from short-selling hedge funds, which take a stake against a public company they believe will fail.
Elliott’s targets span industries, and the firm has been picking up the pace in recent months, grabbing shares of Starbucks, Southwest Airlines, and Match Group. And the activist packs a punch: Honeywell just announced a breakup after Elliott took a stake in the business.—LB
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