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Why Elliott Is Targeting Hess



What Elliot wants

Hess (HES) is currently focused on achieving lower costs and higher-return assets while developing its offshore Guyana oil discoveries. The company is also focused on keeping up its dividend payments, and, more recently, share buybacks.

However, activist hedge fund Elliott Management doesn’t seem to be satisfied with Hess’s strategy. According to The Wall Street Journal, Elliott portfolio manager John Pike stated that “as long-term shareholders in Hess, we are frustrated by the company’s continuing underperformance,” adding that immediate changes are needed to “remedy Hess’s severe undervaluation” and “need to be announced without delay.”

Elliott has sought the input of investment banks to ascertain buyer interest levels in Hess or some of its assets. It has also retained recruiters to identify protestors among board directors in case the board chooses to pursue another proxy fight.

The activist fund seeks to either oust current CEO John Hess, or have him sell all or part of the company. The hedge fund also believes that the company would be better off buying back stock, which it perceives as undervalued.

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