Shares in BP BP. jumped 6.49% to 462p on the news that activist hedge fund Elliott Management had acquired a stake in the oil major. The move comes ahead of the company’s annual earnings on Feb. 11 and an investor day on Feb. 26.
The size of Elliott’s stake is not known, but it could signal a shakeup at BP, whose shares are off 3% since the same point last year. Shares in larger rival Shell SHEL are up 6% in the same period.
Despite today’s share price rise, BP remains below its fair value estimate of 490p.
What the Elliott Move Might Mean for BP
Morningstar analyst Allen Good explains what the move might mean for one of the FTSE 100’s largest companies:
- BP’s long-term underperformance has previously raised the question of why no activist investor was involved and its size was likely the obstacle.
- Elliott Management’s stake in BP means the hedge fund is taking a chance on spurring change as it has with other oil and gas companies
- There are a variety of options it could pursue including a sale, a US relocation, but the most likely would-be strategic change that refocused on oil and minimized its low carbon output as Shell has done
- BP’s earnings will likely be uneventful but also because the strategic update was moved to Feb. 26.
Key Morningstar Metrics For BP
Analyst: Allen Good, CFA
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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