Elliott Management, the activist hedge fund known for its aggressive investment strategies, has taken a stake in BP, signalling potential pressure on the UK oil giant to reevaluate its strategy amid ongoing financial performance struggles, according to a report by Bloomberg.
The report cites unnamed sources as confirming the stake without disclosing its exact size.
Shares in BP jumped to the top of the FTSE 100 on Monday morning, putting on 7% in early deals as the markets digested news of Elliot’s position in the business.
Elliott, which manages $70bn in assets, has recently shifted its focus toward making larger bets on fewer companies, amplifying its influence in situations such as BP, where shares have underperformed. Over the past year, BP’s stock has fallen nearly 9%, compared to a 6.5% rise for rival Shell, with the company coming under fire for its high debt levels, lack of strategic clarity, and underwhelming financial performance.
Elliott’s involvement raises speculation about potential shifts in BP’s direction. The hedge fund could push for BP to refocus on its core oil and gas business, moving away from its extensive green energy initiatives. Some investors have even suggested that Elliott might advocate for a breakup of the company or a retrenchment from weaker segments of its business.
Elliott’s move comes amid broader dissatisfaction among investors, with some describing BP’s board as having a “muddled strategy” and being “asleep at the wheel.”
BP, led by CEO Murray Auchincloss, has been navigating significant headwinds. The company downgraded its fourth-quarter profit guidance due to weak refining margins, with analysts slashing consensus earnings estimates by 35%. BP also recently announced plans to reduce its 90,000-strong workforce by 5% and cut contractor numbers by 3,000 as part of a $2bn cost-cutting initiative.
In addition, BP has paused or stopped 30 projects since June, streamlined its business operations, and put its German refinery and petrochemical complex in Gelsenkirchen up for sale. The company spun off its offshore wind assets into a joint venture with Japan’s Jera last year to ease its debt burden.
Despite these efforts, investor confidence remains low. Analysts have warned that BP is likely to reduce its planned $1.75bn share buyback program, further dampening market sentiment.
Elliott, led in Europe by Gordon Singer, has a history of pushing for strategic overhauls and boardroom changes at major companies. Recent successes include backing a plan to streamline UK-listed conglomerate Smiths Group and forcing a split of US industrial giant Honeywell just three months into its activist campaign.
