Elliott Management Takes Aim at BP with Four Billion Pound Stake Pushing for Strategic Overhaul

The activist investment powerhouse Elliott Management has accumulated a substantial £4 billion stake in British energy giant BP, advocating for a significant strategic shift that mirrors rival Shell’s recent transformation. The New York-based hedge fund has built approximately a 5 per cent holding in the company, establishing itself as BP’s third-largest shareholder behind BlackRock and Vanguard.

The influential investment firm is pressing BP’s chief executive Murray Auchincloss to adopt an approach similar to Shell’s Wael Sawan, who has implemented aggressive cost-cutting measures and scaled back green investments. The timing of Elliott’s push is particularly significant, coming just ahead of BP’s anticipated investor day on 26 February, where Auchincloss has promised to “fundamentally reset” the company’s strategy.

Sources close to the matter indicate Elliott’s vision includes reducing capital investment, focusing on high-return projects, and divesting from what they term “ideological” investments. The hedge fund’s stake, valued at £3.8 billion, represents one of its largest investments to date.

The contrast between BP and Shell’s recent performance is stark. Under Sawan’s leadership, Shell has seen its shares rise by roughly 12 per cent, while BP’s stock has declined by 3 per cent during the same period. This disparity has led to a significant valuation gap, with Shell’s market capitalisation of £161 billion more than doubling BP’s £75 billion.

Elliott’s campaign, spearheaded by Gaurav Toshniwal and John Pike, aims to catalyse transformative changes at BP. The hedge fund’s track record in driving corporate reform has already sparked investor optimism, despite BP’s shares closing down 1 per cent at 464p on Thursday.

The intervention comes at a crucial juncture for BP, following the departure of former CEO Bernard Looney in September 2023. Auchincloss has already initiated some strategic shifts, including the restructuring of BP’s offshore wind business into a joint venture, though Elliott is reportedly pushing for more extensive reforms.