Hedge fund’s BP stake worth £3.8bn as firm expected to ditch green promises

The hedge fund targeting BP has built a stake in the fossil fuel giant worth nearly £3.8 billion, according to reports, making it the third biggest investor in the company.

Elliott Management’s investment gives it a roughly 5% stake, enough to wage a widely expected campaign to make BP ditch most of its green energy commitments.

BP’s profit hit a four-year low last year, prompting bosses to promise to “fundamentally reset” its strategy earlier in February.

But experts think Elliott, which has a reputation for demanding changes at companies it invests in to improve their market value, could also call for a boardroom overhaul.

It is thought that Elliott will push for further divestment of clean energy business segments as part of a renewed switch back towards traditional oil and gas, mirroring others in the industry.

The size of Elliott’s stake in BP was first reported by the Financial Times.

On a call with analysts on Tuesday, chief executive Murray Auchincloss declined to comment on the hedge fund’s activities, calling news reports around the issue “speculation”.

But most experts think he will announce a pullback from the vast majority of BP’s renewables spending at an upcoming shareholder meeting on February 26.

Elliott’s previous targets on the London Stock Exchange include drug-making giant GSK and housebuilder Taylor Wimpey.

Mr Auchincloss said on Tuesday that BP is in the process of “reshaping its energy portfolio” and promised more changes to “drive further improvements in performance”.

“It will be a new direction for BP, and not business as usual. I am excited about it and look forward to updating the market and seeing many of you then,” he said.

BP’s shares have languished in the past two years on investor concerns over a shift under previous boss Bernard Looney towards becoming a net zero energy company by 2050.

Its close FTSE 100 rival Shell also revealed a steep profit drop when it reported at the end of last month as the sector has been knocked by weaker oil prices and lower demand for the fossil fuel, but BP’s profit woes appear more acute.

Mr Auchincloss was appointed to the top role in January last year, having been acting chief executive since September 2023 following the surprise resignation of Mr Looney after BP’s former boss failed to disclose his past relationships with company colleagues.

The chief executive has already spun off BP’s offshore wind business in a joint venture while he is looking to offload its onshore wind arm.

BP and Elliott declined to comment.