Elliott Investment Management is turning up the heat on Phillips 66 (PSX, Financial), revealing a $2.5 billion stake and demanding sweeping changes to unlock shareholder value. The activist investor, now one of the company's top five shareholders, is pushing for a breakup—urging Phillips 66 to sell or spin off its pipeline business, which Elliott believes could be worth over $40 billion. The firm isn't buying into management's claims of progress, arguing that the company has underperformed for years and trails competitors like Valero and Marathon Petroleum by a wide margin. Shares of Phillips 66 jumped over 4% at 3.12pm today as investors took note.

Elliott's frustration is clear. Its latest proposal, called "Streamline66," lays out a three-part fix: sell off non-core assets, ramp up refining performance, and overhaul leadership. The firm points to Phillips 66's weak margins—its refining EBITDA per barrel lags Valero's by a growing gap—and says the company's structure is a mess, diluting the value of its assets. Worse, Elliott says investor trust is shot, thanks to broken promises and a CEO-Chairman setup that concentrates power at the top. The message is blunt: the status quo isn't working, and shareholders deserve better.

Phillips 66 has already offloaded $2.7 billion in assets, but Elliott says that's just a start. The activist fund is calling for new independent directors and a sharper focus on core operations to restore credibility. With the energy sector rewarding efficiency, the pressure is on. Will Phillips 66 finally follow through—or will investors be stuck waiting for another turnaround that never comes?