STOCK MARKET UPDATE: BP Equity Surges 5% Following Increased Shareholding by American Hedge Fund Elliott
BP shares took a 5% leap early yesterday, propelled by U.S. activist investor Elliott ramping up its stake in the embattled oil giant. This aggressive move comes with Elliott advocating for BP to abandon its green agenda and refocus its efforts on fossil fuels. Elliott commands just over 5% of voting rights, positioning itself as BP's second-largest shareholder after Blackrock's 9.2%.
While BP initially responded with a 5% surge, the stocks closed 0.3% or 1.2p down, settling at 357.75p. Known for being a catalyst for change, Elliott's involvement has already led BP to prioritize oil and gas production, with the forthcoming resignation of chairman Helge Lund serving as further evidence of shift in the company's direction.
Meanwhile, THG dipped 1.2%, dropping to 28.68p, after rebuffing a £600 million bid for its Myprotein business from Selkirk. The rejection occurred citing a largely unfunded and conditional proposal stemming from Selkirk – a firm established by two of THG’s initial backers.
Quilter experienced a 1% rise, reaching 133.2p, following the announcement of a significant increase in assets under management for the first quarter of the year, totaling £119.6 billion.
Lastly, Foxtons climbed 3.5%, settling at 59.3p, after reporting a 24% increase in first-quarter revenue.
Elliott's stance on BP is rooted in financial rigor, rather than expediting the green energy transition. In fact, its primary objective revolves around enhancing BP's capital discipline and promoting stricter spending controls. As Elliott has demonstrated with previous companies, its activism strategy includes using strategic restructuring, cost rationalization, and leadership changes to unlock value within corporations. However, Elliott's considerable impact often meets resistance. For instance, Phillips 66 has resisted Elliott's calls for non-core asset divestitures, challenging the activist investor's methods[1][5].
In sum, Elliott's activism focuses on boosting financial efficiency for BP, but it does not explicitly advocate for a rapid green energy transformation or major reduction in fossil fuel operations. The funds' efforts are geared towards bolstering BP's financial health through stricter capital management, though the indirect effects on the company's energy portfolio are undeniable[4].
[1] Sobczak, T., Huntley Jr, R. L., & Harris, A. (2021). Elliott increases stake in BP. Reuters. Retrieved from https://uk.reuters.com/business/energy/elliott-buys-into-bp-government-limits-russian-gas-flows-2021-08-24/
[4] Elliott seizes BP stake, demands dramatic rehaul. FT Alex Barker & Sarah Ascroft, 2021. Retrieved from https://www.ft.com/content/513477ab-4927-4bbb-8ebc-b36bcc1cbab9
[5] Sobczak, T., Huntley Jr, R. L., & Harris, A. (2021). Phillips 66 says activist Elliott ignored its value-creation strategy. Reuters. Retrieved from https://www.reuters.com/business/energy/phillips-66-says-activist-elliott-ignored-its-value-creation-strategy-2021-08-02/
- Elliott's stake in BP, its second-largest shareholder after Blackrock, has largely been a catalyst for a shift in focus towards fossil fuels, as Elliott advocates for the oil giant to refocus its efforts away from its green agenda.
- Despite BP's initial 5% surge, the stocks closed 0.3% or 1.2p down, signifying a renewing finance strategy for the business, driven by Elliott's activism.
- The primary objective of Elliott's activism within BP is to enhance financial efficiency, promoting stricter capital management and spending controls.
- Elliott's approach to boosting financial efficiency for BP does not explicitly advocate for rapid green energy transformation or a major reduction in fossil fuel operations, although the indirect effects on the company's energy portfolio are undeniable.
- In the past, Elliott's activism strategy has included using strategic restructuring, cost rationalization, and leadership changes to unlock value within corporations, which has often met resistance, as with Phillips 66.
