(Bloomberg) -- Several BP Plc shareholders said they welcome activist Elliott Investment Management taking a stake in the British oil major because the company needs to make meaningful changes.
“Any shift in strategy that closes the BP valuation gap with its peers will be very welcome,” said Ed Meier, investment manager at Jupiter Asset Management, which holds more than 55 million shares, or less than 1%, according to data compiled by Bloomberg.
Four other investors, all of whom rank among BP’s 30 largest shareholders, said they’re pleased an activist such as Elliott has acquired a stake in the London-based company. More radical changes were long needed at BP, the four investors said, asking not to be named discussing specific investments.
Elliott built up a 5% interest in BP and is demanding the firm make drastic cost cuts and divestments to strengthen its future as a standalone company, Bloomberg News reported.
The New York-based investor wants BP to reshape its business to be more like other oil majors, such as Shell Plc, by cutting spending in areas including renewable energy, as well as making sizable non-core asset sales.
The shareholders said that while BP is disentangling itself from investments in clean power that were done at a wrong point in time, it hasn’t given the market a clear sense of how and when it will deliver better returns, including buybacks.
Chief Executive Officer Murray Auchincloss pledged this week to present a “fundamental reset” of BP’s strategy at its investor day on Feb. 26. The company is widely expected to pivot from ambitious plans for low-carbon energy and pursue higher growth in oil and gas production.
Some shareholders also pointed out that Elliott is probably investing at a good time because BP is already moving to change its strategy, and the bigger attention that comes with a high-profile activist can speed things up.
“Someone like Elliott is generally very good at getting the ball rolling, and that’s what needed to happen,” said Sue Noffke, head of UK equities at Schroders Plc, which also holds more than 55 million shares in BP, according to the data.
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