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Activist hedge fund Elliott Management has built a stake in struggling UK oil major BP, according to two people with knowledge of the move.
The exact size of Elliott’s stake could not be learned but the $70bn assets under management hedge fund has adjusted its activist strategy in recent years to increase the size of its individual bets, while reducing the number of situations it focuses on.
BP’s shares have fallen nearly 9 per cent over the past year, compared with a 6.5 per cent rise for rival Shell, and investors have complained about the company’s financial underperformance, high levels of debt and lack of strategic clarity.
For the past several weeks, speculation has been rife in the London market that BP is vulnerable to a takeover bid or to an activist shareholder.
Pressure from the US investor could push BP to refocus on its core oil and gas business after years of building up a sprawling empire of green energy projects.
One BP investor suggested that Elliott could call for a full break-up or for the company to retrench from some of its weaker businesses and relist in the US.
Other activist funds have recently looked at amassing a stake in BP, but the size of the £70bn company has deterred them. One US activist that considered a move said BP’s board had been “asleep at the wheel” and had a “muddled strategy”. It added: “BP’s upstream business on its own justifies its entire market value.”
Both BP and Elliott declined to comment.
BP reports quarterly results on Tuesday, and will update investors on its medium-term strategy on February 26.
Murray Auchincloss, the company’s chief executive, delayed the update and moved it from New York to London after having undergone an undisclosed medical procedure.
Elliott is led in the UK and Europe by Gordon Singer, the son of the firm’s founder Paul Singer. The firm has targeted companies such as UK-listed mining group Anglo American and pharmaceutical giant GSK.
The firm is well known as a fearsome activist investor that is willing to fight boardroom battles if it disagrees with a company’s strategic direction.
Earlier this week the FT reported that Elliott had built almost a 5 per cent stake in UK listed conglomerate Smiths Group, backing a plan for the company to sell or demerge two of its four units.
The firm scored a big win at US conglomerate Honeywell this week as the company announced plans to split on Thursday, just three months after Elliott embarked on a campaign to achieve that outcome.
Elliott’s stake in BP was first reported by Bloomberg.
Additional reporting by Jamie Smyth in New York
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