(Bloomberg) — Elliott Investment Management has built a significant stake in BP Plc, according to people familiar with the matter, as the British oil major struggles to win back investor confidence and reverse years of underperformance.
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The activist fund is seeking to boost shareholder value by pushing the company to consider transformative measures, the people said, asking not to be identified because the discussions are private. Elliott believes BP is significantly undervalued and its performance is disappointing, they said. The exact size of the stake couldn’t be immediately learned.
Representatives for Elliott and BP declined to comment.
BP has fallen about 8% over the past five years, while its Big Oil rivals from Shell Plc to Exxon Mobil Corp have risen by at least 30%. The company under former Chief Executive Officer Bernard Looney embraced net-zero in a failed bet that oil consumption had peaked, and has since struggled to present a clear strategy for a turnaround.
With a market value of about $86 billion, BP is worth less than half of Shell today.
CEO Murray Auchincloss, an insider who stepped into the role after Looney was dismissed over his personal conduct, is widely expected to outline a clearer shift back toward oil and gas when he presents a much-anticipated strategy update on Feb. 26. However, investors have been growing impatient, including after BP warned in October that its share buybacks could slow this year.
BP is scheduled to report fourth-quarter financial results on Tuesday, and has already flagged broad weakness across its business for the period. While its biggest rivals also reported lower earnings in the last three months of the year, analysts view those companies as having a clearer direction and stronger balance sheets.
Elliott’s move is the latest in a series of high-profile activists taking on Big Oil. Exxon lost an battle to ESG-leaning Engine No. 1 in 2021, while Dan Loeb’s Third Point LLC took a stake in Shell in the same year, calling for the company to break off its liquefied natural gas, renewables and marketing divisions into a standalone business.
Elliott has in recent months successfully pushed for a breakup at Honeywell International Inc., which announced this week it would split into separate publicly traded companies. The fund also disclosed a stake in Anglo American Plc last year during BHP Group’s attempt to acquire the London-based miner.