Shell PLC is the focus of attention this morning, after activist investor Elliott Investment Management revealed a large short position.
Elliott built a position of PS850,000,000 ($1.1 billion), against the London-based company.
This news comes only a few weeks after asset manager revealed a stake of around 5.0% in the peer BP plc. (LON: BP).
Shell shares are down by less than 1.0% after the Elliott announcement on Friday.
Elliott’s position on Shell is not criticised by its short-term strategy
Maurizio Caulli, energy and materials analyst at Quilter Cheviot, says that Elliott’s investment in Shell is more about risk management than criticism.
In a recent research note, the analyst told his clients that when a hedge-fund creates a position long, it is important to have a position short in another similar company.
The activist investor built a position in BP and has now chosen to short Shell as a risk-management measure to counteract that investment.
He clarified that macro-factors, such as changes in the oil price, could cause a loss to Elliott Management. “They now have some coverage,” he added.
Oil stocks are up by more than 10 percent compared to the beginning of the year 2025.
Elliott has also taken a position on TotalEnergies
Elliott Management also disclosed recently a similar short position on TotalEnergies, the French gas and oil giant.
Shell and the activist investor have not yet officially responded to the story.
Elliott makes moves on the European energy shares at a moment when managements of these companies are starting to spend on fossil fuels again, despite their plans to accelerate their switch to renewables.
Shell for instance, reiterated its plans to increase LNG production last week.
It also announced plans to spend just 10% of capital on initiatives that reduce carbon emissions – down from the original 20%.
Shell Stock: What can we expect in 2025
Elliott is a short-term investor and stands to gain if Shell’s stock continues to decline.
Analysts are not certain if this will occur.
Shell’s consensus rating is currently “buy”, with a mean price target of $83 per share, indicating a roughly 14% increase in its US-listed shares.
Shell had announced earlier in March that it would increase shareholder dividends up to a maximum of 50%, and grow free cash flow per share by more than 10% annually until the end of the decade.
Shell’s revenue will decline in 2024.
Oil majors earned $23.72 (adjusted), down from 28.25 billion dollars in 2023.
This weakness was attributed by the London-listed company to lower oil costs.
This article Why did activist Elliott create a short-term position on Shell? This post may be updated as new information becomes available
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