3. Shell Plc (NYSE:SHEL)
Number of Hedge Fund Holders: 41
GAMCO Investors exited Shell Plc (NYSE:SHEL) in the first quarter of 2022. However, things are looking bright for the company as the stock is attracting price raises and “Buy” ratings from Wall Street analysts. On May 6, UBS analyst Henri Patricot raised his price target on Shell Plc (NYSE:SHEL) to 2,550 GBP from 2,450 GBP and reiterated a Buy rating on the shares.
Moreover, Shell Plc (NYSE:SHEL) is initiating share buybacks. On May 5, the company announced the commencement of trading in the second cycle of its $8.5 billion share buyback program that was announced on February 3, after having completed the first cycle of this share buyback program on May 4. The company has successfully repurchased over 148.2 million ordinary shares which were valued at $4 billion. Shell Plc (NYSE:SHEL) anticipates the second cycle of the share buyback to reach completion by the company’s Q2 earnings release which is scheduled on July 28.
By the end of the fourth quarter of 2021, 41 hedge funds held stakes in Shell Plc (NYSE:SHEL). The total value of these stakes came in at $2.63 billion. This is compared to 33 positions in the previous quarter with stakes worth $2.05 billion. The hedge fund sentiment for the stock is positive.
Third Point Management, an investment management firm, published its first-quarter 2022 investor letter in which it mentioned Shell Plc (NYSE:SHEL). Here is what the firm said:
“We have continued to add to our position in Shell, as it trades at the same deeply discounted multiple today that it did last year due to a move up in commodity prices. We are engaged in discussions with management, board members, and other shareholders, as well as informal talks with financial advisors. We have discussed various alternatives with the aim of both increasing shareholder value and allowing Shell to effectively manage the energy transition. We have reiterated our view that Shell’s portfolio of disparate businesses ranging from deep water oil to wind farms to gas stations to chemical plants is confusing and unmanageable. Most investors we have discussed this with agree that the company would be more successful over the long term with a different corporate structure. Discussions among the parties have been constructive and will be ongoing since stakeholders clearly see these corporate changes as instrumental, particularly if Shell wishes to become a leader in the energy transition rather than be left behind as a tarnished legacy brand.
Beyond our discussions around corporate structure, there have been two important developments since our last update. First, Shell announced a plan to redomicile its headquarters to the UK and create a single shareholder class. This move allows greater flexibility to modify its portfolio (either through asset sales or spin-offs) and allows for a more efficient return of capital, specifically via share repurchases. Second, fundamental and geopolitical events have highlighted the strategic importance of reliable energy supplies, especially in Europe. Shell’s LNG business, the largest in the world outside of Qatar, will play a critical role in ensuring energy security for Europe. In our view, the value of this business has increased dramatically since our original investment.
While Shell continues to trade at a large discount to its intrinsic value, with proper management we believe the company can simultaneously deliver shareholder returns, reliable energy and decarbonization of the global economy. We look forward to continued engagement with management and other shareholders and to more strategic clarity from the Company.”
