Elliot Management Takes $1B Stake In Phillips 66, Sees 75% Upside
While the outward facing bastardization of the oil industry continues from left-wing lunatics, those actually interested in (1) reality and (2) making money realize that the runway for the world’s fossil fuel industry still has plenty of room.
That’s probably why Elliott Investment Management is reported to have amassed a $1 billion position in the American multinational energy company Phillips 66, according to reporting by CNBC’s David Faber this morning.
The investment manager sees potential upside of about 75% in the name, Bloomberg reported, and is seeking two directors at the company.
In a letter to the company, Elliot wrote: “Given the Company’s history of failed execution, we believe shareholders would welcome the appointment to the Board of two new directors with refining-operating experience.”
It continued: “We have identified multiple highly qualified directors who we believe would provide relevant experience and expertise as the Board implements the necessary operational improvements at Phillips 66. Furthermore, we believe these directors will help enhance a Phillips 66 Board that has limited refining-operations expertise, which is particularly noteworthy given the Company’s poor execution in this segment.”
“Should Phillips 66 be unable to deliver on its 2025 targets, Elliott believes the Company could successfully implement a similar path to the one Marathon Petroleum Corporation followed after its engagement with Elliott in 2019,” it continued.
“If it becomes necessary, we are confident Phillips 66 could follow a similar path,” the firm wrote, by:
- Making appropriate management changes;
- Closing the current $2-$3 per barrel refining EBITDA gap between Phillips 66 and Valero; and
- Generating $15 billion to $20 billion of after-tax cash proceeds from the sale of Phillips 66’s CPChem stake, European convenience stores, and a portion of its non-operated midstream stakes – monetization events that would enable a best-in-class capital-return program while sustaining an investment-grade balance sheet.
“Over the past three years, as Phillips 66 has fallen further and further behind, its stock has meaningfully underperformed these peers,” it continued.
The company’s operating expense per barrel has been “shaking investor confidence in the company’s ability to run its refining operations efficiently,” the investment manager said.
Elliot is not pushing for management changes at the company just yet, stating: “We are hopeful the current management team, supported by an enhanced Board, can deliver on its performance targets and achieve significant stock-price outperformance.”
“At present, we believe Mr. Lashier and the rest of the management team deserve investor support so long as they demonstrate meaningful progress against these targets. At the same time, we find the market’s skepticism to be understandable, and we believe the Board must take several steps to reassure investors that Phillips 66 is in the best possible position to achieve its value-creation potential.”
Warren Buffett had also previously been a shareholder in Phillips 66, but sold his stake in 2020.
Elliot’s stake could be coming amidst a broader change in sentiment about oil and gas companies. Recall we wrote just days ago that Deutsche Bank’s CIO is now pressing for oil and gas companies to be included amongst ESG names. Markus Müller stated last week that sustainability funds should include traditional energy stocks, arguing that not doing so deprives investors of a prime opportunity to invest in the transition to renewable energy.
Obviously, Elliot isn’t bothered by the ESG charade…
Wed, 11/29/2023 – 10:00
[Editor’s note: This story originally was published by The Daily Signal.]
By Sara Garstka
The Daily Signal
Pro-life state laws have saved an estimated 32,000 babies’ lives, new research claims.
Since the June 2022 U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization returned decision-making on laws regulating abortion to the people and their elected representatives, aggregated data reveals increased fertility rates in states that have since outlawed or sharply restricted abortion.
The research was conducted by economists at the Georgia Institute of Technology and at Middlebury College in Vermont. The researchers compared birthrates between states that restrict and allow abortion.
Dobbs “sparked the most profound transformation of abortion access in 50 years,” according to the study, “The Effects of the Dobbs Decision on Fertility,” published by the Institute of Labor Economics, a Germany-based nonprofit economic research network. “The results indicate that states with abortion bans experienced an average increase in births of 2.3 percent, relative to states where abortion was not restricted.”
The researchers estimated the effects of abortion bans on fertility rates using data from states with abortion bans in the first half of 2023. “These effects also vary substantially across ban states, with much larger effects observed in states that are bordered by other ban states and hence have long travel distances to reach facilities that remain open,” according to the study.
Where distance to a state with legal abortion increased, the fertility rate was even higher. Texas, noted for its size, and bordering other states with abortion bans, saw a 5.1% increase in estimated births, the research showed.
As of Nov. 7, 14 states had banned abortion, with some exceptions for cases of rape or incest, or to preserve the life of the mother, and seven states have restricted it after a certain gestational age ranging from six to 18 weeks, The New York Times reported.
Alison Gemmill, assistant professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore, told CNN that fertility rates “don’t typically change dramatically,” so “the fact that there is a signal at the population level means that something’s really going on [with abortion bans].”
In their discussion, the researchers estimate that 20% to 25% of women seeking abortions “did not receive them due to bans.”
“We should celebrate these thousands of precious, irreplaceable lives who are with us today,” Melanie Israel, policy analyst in the Richard and Helen DeVos Center for Life, Religion, and Family of The Heritage Foundation, told The Daily Signal in a written statement. “Pro-life laws save lives, and policymakers at every level of government should continue building on the momentum to protect women and unborn children from the violence of abortion.” (The Daily Signal is the news outlet of The Heritage Foundation.)
[Editor’s note: This story originally was published by The Daily Signal.]
Senior CIA Official Posts, Then Deletes Pro-Palestine Content
A senior official at the CIA posted a pro-Palestine photo on her Facebook page amid Israel’s bombardment of the Gaza Strip but later deleted the post and other pro-Palestinian content after it was reported by the media.
The Financial Times reported on Tuesday that the CIA associate deputy director for analysis changed her Facebook cover photo on 21 October to an image of a man waving a Palestinian flag.
The official also published a selfie with a sticker saying “Free Palestine” superimposed on the photograph, which the Financial Times reported was posted to Facebook years before the ongoing war, citing an unnamed person familiar with the image.
The images were deleted on Monday after the Financial Times contacted the official, the report said. Middle East Eye reached out to the CIA associate deputy director for analysis on LinkedIn for comment but didn’t receive a reply by the time of publication.
While CIA officials like those in the directorate of operations mainly work undercover with their identity obscured, others who provide analysis for the agency can have a more public profile. It is extremely rare, however, for officials working in government intelligence, particularly senior officials, to share their political views on current events.
The associate deputy director for analysis at the CIA reviews and studies the raw intelligence that field officers collect from foreign sources abroad. That intelligence goes into a highly classified document known as the President’s Daily Brief, which the US leader receives almost daily.
The revelation that a senior US intelligence official was posting images widely seen as supportive of the Palestinian cause comes at a sensitive time for the Biden administration, which has faced pushback from officials over its unconditional support for Israel.
Middle East Eye reported in October that State Department officials had penned dissent cables calling for the US to push Israel for a ceasefire. The Biden administration’s stance has also pitted senior officials within the National Security Council against younger staffers, particularly those from diverse backgrounds, who have expressed concern over the support to Israel.
A former US official was recently filmed advocating for killing Palestinian children. New York police arrested Stuart Seldowitz, a former US State Department official, earlier in November after he was captured on video calling an Egyptian halal food street vendor a terrorist and saying the death of 4,000 Palestinian children “wasn’t enough”.
The Financial Times report is notable because it is the first to suggest that a senior US official within the intelligence community has expressed pro-Palestinian sentiment since the outbreak of war on 7 October.
The CIA official was later identified by name in a Washington Free Beacon report…
JUST IN: High-Ranking CIA Officer Found Sharing Pro-Palestinian Material on Social Media..
Amy McFadden, the Associate Deputy Director for Analysis at the CIA, altered her social media cover photo to one supporting Palestine, which occurred two weeks after Hamas, recognized as a… pic.twitter.com/cMlfUXu0oD
— Chuck Callesto (@ChuckCallesto) November 28, 2023
The CIA prides itself on being apolitical and delivering unbiased intelligence to the US president regardless of the political views of its officers and staff. It is extremely rare for a senior intelligence officer to make personal political statements.
The disclosure comes as the head of the spy agency, Bill Burns, takes on a leading role in managing the administration’s response to the conflict. The CIA director has met with leaders from Egypt, Jordan, Israel, and Gulf states to discuss Israel’s battle plans and the release of hostages. On Tuesday, he was in Doha for talks with his Israeli counterpart and Qatari officials serving as mediators with Hamas.
Wed, 11/29/2023 – 09:40
GM Shares Surge Over 10% After Announcing $10 Billion Buyback, Raising Dividend By 33%, Updating 2023 Guidance
General Motors shares are surging more than 10% in the pre-market session on Wednesday after the company said it is set to boost its quarterly dividend by 33% to 12 cents per share in the coming year.
Additionally, the company is launching a swift $10 billion share buyback, according to CNBC. “GM will immediately receive and retire $6.8 billion worth of its common stock,” the report said.
In its 2023 projections, it has also reincorporated expectations, factoring in an anticipated impact of $1.1 billion in EBIT-adjusted earnings due to approximately six weeks of labor strikes by the United Auto Workers union in the U.S.
“The long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” CEO Mary Barra said in a statement.
GM’s new 2023 guidance includes:
Net income attributable to stockholders of $9.1 billion to $9.7 billion, compared with a previous outlook of $9.3 billion to $10.7 billion.
Adjusted EBIT of $11.7 billion to $12.7 billion, compared with the previous outlook of $12 billion to $14 billion.
Adjusted earnings per share of roughly $7.20 to $7.70 including the stock buyback, compared with the previous outlook of $7.15 to $8.15.
EPS in the range of $6.52 to $7.02, including the stock buyback, compared with the previous outlook of $6.54 to $7.54.
Adjusted automotive free cash flow of $10.5 billion to $11.5 billion, compared with the previous outlook of $7 billion to $9 billion.
Net automotive cash provided by operating activities of $19.5 billion to $21 billion, compared with the previous outlook of $17.4 billion to $20.4 billion.
Before the UAW strikes, CFO Paul Jacobson indicated the company was on course to meet the higher end of its earnings forecast. However, new U.S. and Canadian labor agreements are now set to raise costs by $9.3 billion, adding roughly $575 to each vehicle’s cost, primarily due to the UAW deal expiring in April 2028, the report says.
Recall, in late October, GM agreed to a deal that included 25% hourly pay raises plus cost-of-living allowances over the more-than-four-year contract.
CNBC reported that, to mitigate these costs, GM plans to reduce 2023 capital spending to $11.0-$11.5 billion, down from the previously expected $11-$12 billion, by delaying certain new products and investments, especially in EVs.
CEO Barra expressed disappointment in this year’s production of Ultium EVs but remains optimistic about increased production and improved EV margins. Despite recent challenges, GM’s long-term EV profitability goals remain unchanged, aiming for low to mid-single-digit EBIT-adjusted margins by 2025, ahead of its 2035 target to exclusively offer electric vehicles.
Regarding the company’s autonomous driving unit, Cruise, GM said it is “addressing challenges” in the segment. Recall, just days ago we wrote that the automaker would likely be slashing its spending on the initiative after a pedestrian accident last month that led the company to suspend its testing.
The spending cuts have people questioning the economics of Cruise as a business. GM had bought out Softbank’s minority share in the segment for $2.1 billion last year and now owns 80% of Cruise. It has invested “billions” in total into the company.
“These strategies are designed to keep our margins and free cash flow strong, and we are well-positioned as we head into 2024. I’m confident we’ll be able to execute our plan and excited about what the future holds. We look forward to sharing our progress with you,” Barra concluded.
Wed, 11/29/2023 – 09:25