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What’s Driving Hess Stock Upwards

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Hess stock’s performance

On December 15, 2017, activist hedge fund Elliot Management renewed its mission to make changes at Hess (HES). Elliott wants the upstream company to sell some of its assets and focus on buybacks instead of dividends. Hess stock rallied after the news, rising 1.7% on December 16. Since then, the stock has risen even more, by 5.3%, boosted by the passing of Trump’s tax reform bill on December 21. CEO John Hess owns 11.3% of the stock, while Elliott owns 6.7%.

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Performance in 2017

Hess fell ~25% in 2017, underperforming the Energy Select Sector SPDR ETF (XLE) which fell ~5.5%. In contrast, the S&P 500 SPDR ETF (SPY) (SPX-INDEX) rose 18.3%.

History between Hess and Elliott

Tensions between Hess and Elliott date back to 2013. The hedge fund stated that the company lacked oversight and that it needed to streamline its focus. Hess eventually met most of Elliott’s demands, selling off several assets. It also added three board members nominated by the fund, and John Hess gave up his role as chairman of the company. Continue on to the next part to read about why Elliott has renewed activist interest in Hess.

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