MARKET REPORT: US hedge fund calls for dismantling of Shell

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MARKET REPORT: All eyes will be on Shell as the stock market opens as major US hedge fund pushes oil giant to dismantle










All eyes will be on Shell when the stock market opens this morning, as a major US hedge fund lobbies for the oil giant to be dismantled.

New York-based Third Point, led by activist investor Daniel Loeb, has taken a stake worth over £ 500million in FTSE100 and accused it of having an ‘inconsistent’ strategy . He urged Shell to split into “several stand-alone companies,” including one branch focused on oil and gas and one that houses renewables.

The move comes as Shell, like other oil giants, is fighting to reduce greenhouse gas emissions.

Focus: New York-based Third Point, led by activist investor Daniel Loeb, has taken a stake worth over £ 500million in Shell

According to the FT last night, a letter to Third Point shareholders said Shell had “too many competing stakeholders pushing it in too many different directions, resulting in an inconsistent and conflicting set of strategies.”

In a statement, the oil group said: “Shell regularly reviews and assesses the company’s strategy with a focus on creating shareholder value.

“As part of this ongoing process, Shell welcomes an open dialogue with all shareholders, including Third Point. Shell’s investor relations team has had preliminary discussions with Third Point and we are engaging with them, as we are with all of our shareholders. ‘

Insurer Admiral fell to its lowest level in 11 months after a major investor abandoned a large stake.

Munich Re, one of the world’s largest reinsurers and a major shareholder, disposed of 12.1 million shares, reducing its stake to less than 5% from 9.9% in early September.

Based on Tuesday’s closing price of 3047p, Munich Re could have pocketed around £ 369million.

Admiral hit an all-time high of 3688p in August, but last night it fell 5.5%, or 168p, to 2879p. The decline follows a strong first half in which profits swelled 76% year-on-year to £ 482million in the six months to the end of June, which may have sparked profit taking .

The FTSE 100 fell 0.33 percent, or 24.35 points, to 7253.27, while the FTSE 250 was up 0.05 percent, or 10.77 points, to 23,172.04. Markets appeared unsure of which direction to take following Chancellor Rishi Sunak’s budget announcements, although plans to cut alcohol taxes have lifted publicans.

Air passenger tax reduction plans also gave airline shares a little boost, with British Airways owner IAG rising 0.01%, or 0.02 pence, to 159.96 pence, although that Easyjet eventually gave up, closing 0.2% or 1p, at 608.4p. Bus and train operator First Group was up 4.5%, or 4.35 pence, to 100.5 pence after revealing its intention to return £ 500million to shareholders by repurchasing shares.

It is offering 105p per share, a 9.2% premium over its closing price on Tuesday. Offer runs until November 29. It initially announced the payment in July after a £ 2.3bn deal to sell US First Student and First Transit guns.

Emergency repairman Homeserve rose 2.8%, or 23.5p, to 855p after buying rival CET structures for £ 53million. CET provides plumbing, heating and electrical services to insured homeowners. The companies will serve approximately 4.9 million homes. Video game publisher Team 17 fell 0.7%, or 5p, to 720p despite the unveiling of a phone app based on Lego versions of Marvel superheroes. The app, which features “learning adventures and imaginative play” for kids, will launch in 28 languages.

Network International, a payment services provider focused on the Middle East, reported 19% revenue growth in the third quarter. Strong trade in the UAE boosted performance, while payment volumes processed returned to pre-pandemic levels. Shares fell 4.4%, or 16.1p, to 351.3p.

Shares of Premier Inn owner Whitbread rose 0.6%, or 19p, to 3312p after a hike in Morgan Stanley analysts’ target price. The broker raised their target to 3800p from 3700p.


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