Elliott Management has a more than $2.5 billion investment in Phillips 66 and is reportedly intent on forcing the company to narrow its focus on downstream refining and spinoff off its midstream business segment. PSX moved higher on the news as the stock market opened.
The hedge fund, known for shaking up companies by grabbing board seats and spinning off business segments to increase shareholder value, is reportedly pushing Phillips 66 to make several business changes, including to sell or spinoff its midstream business, The Wall Street Journal reported late Monday.
While Phillips 66 is primarily an oil refiner. Its midstream business generates about half of the income that its refining segment does. Exxon Mobil, Chevron and many other oil producers experienced weak refining margins in 2024, as U.S. oil prices averaged just above $76 a barrel and gasoline prices sagged to $3.19 for the year.
Phillips 66 stock jumped 5.2% to 130.18 during Tuesday's stock market trade after gaining 2.8% to 123.71 on Monday. PSX hit a high of 174.08 in April 2024 but has retreated around 30% from those levels. The stock has dropped 29% from its April 2024 high and is currently well below its 200-day line.
Elliott And Phillips 66 Stock
In November 2023 Elliott Management revealed it had a $1 billion stake in Phillips 66 as it pushed for at least two new board appointments as part of measures to "reassure investors that Phillips 66 is in the best possible position to achieve its value-creation potential."
"Phillips 66's performance has declined as it has shifted its focus away from its refining segment," Elliott wrote to the board in late 2023, adding PSX has lagged behind peers Marathon Petroleum and Valero Energy.
"Over the past three years, as Phillips 66 has fallen further and further behind, its stock has meaningfully underperformed these peers," the activist investor added.
PSX stock ended November 2023 trading at 128.89, meaning that prior to Tuesday's stock market open it was down 4% since Elliott's original ultimatum.
A few months after sending that letter, Phillips 66 and Elliott came to an agreement on a new board member. A second director has not yet been named.
Meanwhile, it was revealed over the weekend that Elliott, which has invested in several companies in the energy sector, most recently has built an undisclosed stake in U.K. oil major BP.
Phillips 66 stock has a 19 Composite Rating out of a best-possible 99. Shares also have a 22 Relative Strength Rating and a 34 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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