(Bloomberg) -- Beleaguered shareholders of BP Plc who’ve watched their investment lag over the past few years are banking on activist Elliott Investment Management LP’s track record to help them extract some value from their positions.
Paul Singer’s New York-based hedge fund has amassed a significant stake in BP, Bloomberg first reported on Saturday. Elliott is known for building positions in beaten-down companies and pushing for changes in leadership and strategy to raise the stock price.
BP shares responded to the news Monday, leaping by as much as 8.2% in London trading, the most intraday since November 2020, before trimming some of those gains. The energy producer’s stock is down about 18% from a recent peak in February 2023, placing it among the worst performers in the Stoxx Europe 600 Oil & Gas Index, which has declined 1.3% over the same period.
Since 2020, Elliott’s has targeted nearly 80 companies, roughly 95% of which saw their shares rise on the day it became known the activist had built a stake, with an average return of about 5.5%, according to data compiled by Bloomberg. Perhaps more importantly, over two-thirds of the targets held their advances a year later, with an average gain of more than 35%.
“Elliott’s track record in Europe is mixed compared to its success in the U.S.,” said Ali Saribas, partner at shareholder consultancy SquareWell. “In the U.S., their campaigns often succeed without significant resistance. Whereas in Europe, outcomes have been more varied.”
A spokesperson for Elliott declined to comment. Representatives of BP didn’t reply to a request for comment.
The energy industry represents about 20% of Elliott’s holdings, according to data compiled by Bloomberg. The firm has also gone after UK-listed companies before, including notable campaigns in Anglo American Plc and GSK.
The activist’s entrance puts a “new impetus” on BP’s strategic review after its underlying returns have lagged peers, Citi analyst Alastair Syme wrote in a Monday note. The company is set to give a capital markets update on Feb. 26, and is due to report earnings on Tuesday. The exact size of Elliott’s stake wasn’t immediately known, and the activist is pushing for the energy producer to consider transformative measures, Bloomberg reported.
Here’s where other major investments from the firm stand:
Suncor Energy
The largest of Elliott’s currently publicly disclosed energy positions is in Suncor Energy, after the fund built a stake in the oil-sands producer in 2022. Since then, Elliott successfully pressured the Canadian firm as it appointed a new CEO, and its shares climbed to a 16-year high as the company boosted its share buybacks.
Smiths Group
Among London-listed firms, Elliott amassed a stake in engineering group Smiths Group Plc, which said it was planning a breakup. The activist had built a roughly 5% stake over the course of a year, the Financial Times reported last week.
Tokyo Gas
Shares of Tokyo Gas Co. surged 20% in November, the biggest monthly jump in more than three decades, after Elliott disclosed a stake in the utility and called for it to sell-down its real estate portfolio. The company has since announced a stock buyback plan and said it will consider measures to unlock value from its real estate assets.
Honeywell International
Shares in Honeywell International Inc. soared in November after Elliott revealed its largest ever position in a single stock. The investor called for a breakup, blaming its conglomerate structure for underperforming shares and inconsistent financial results. Honeywell has since announced plans to separate its aerospace division from its automation business, while also proceeding with a previously planned spin out of its advanced materials arm.
Anglo American
Anglo American shares jumped last April when Bloomberg reported that Elliott had built a roughly $1 billion stake in the UK-listed miner through derivatives. Elliott’s stake emerged after Anglo American received unsolicited takeover interest from mining company BHP Group, and the position made Elliott among the miner’s 10 biggest shareholders. Since then, Anglo American has said it will exit some businesses in a restructuring designed to fend off BHP’s bid, including its De Beers operations.
Catalent Inc. shares jumped in late August 2023 when the company said that, as a part of a settlement with Elliott, it would add four new members to its board and undertake a strategic review. The health-care services firm had struggled after experiencing a pandemic boom due to its partnerships with makers of Covid-19 vaccines. It was acquired by Denmark’s Novo Holdings last year.
--With assistance from Aaron Kirchfeld and Crystal Tse.
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