A Shell service station on May 3, 2024 in Austin, Texas.
Brandon Bell | Getty images
The United States activist investor, Elliott Investment Management, has taken a short position against British Oil Major Shell as part of a global coverage program.
The measure, which was first reported by the British newspaper The Times on Thursday, occurs shortly after the Paul Singer’s coverage fund arose, had taken a 5% participation in the Shell’s rival, BP.
It is said that Elliott accumulated a bet of £ 850 million ($ 1.1 billion) against Shell, the Times reported, citing presentations with the financial behavior authority.
According to reports, the position is worth 0.5% of Shell’s shares and is believed to represent the biggest short position revealed against specialized energy in almost a decade. A short position refers to a commitment that the shares of a company will fall into value.
Elliott and Shell declined to comment when CNBC contacted Friday.
Shell’s shares quoted 1% lower around 1:50 pm London time (9:50 am et). The actions that are quoted in London have increased around 13% in the year to date.
Earlier this month, it was reported that Elliott had taken a short position of around 670 million euros ($ 722 million) in the French oil giant Totalgies. A spokesman for Totalgies did not immediately respond to a comment request on Friday.
“When a coverage fund creates a long position, leverage or not, because they often use leverage with these positions, they need risk management purposes to create an opposite position, that is, a brief, in a similar company,” Maurizio Carulli, an energy and material analyst in Quilter Cheviot, on Friday, said on Friday.
“The most likely reason for that is because it is a compensatory position with respect to the BP, so both total and Shell have been created as a short term for risk management,” Carulli told CNBC through the video call.
“Otherwise, if for some reason the market moves against them, for example, things like oil prices or whatever, they need to have some protection,” he added.
Elliott’s movements occur when European energy specialties are folded in fossil fuels in an effort to increase short -term shareholders.
Shell recently announced plans to increase the yields of shareholders and reduce spending, since it reinforces its impulse of liquefied natural gas (LNG). Meanwhile, BP and Norway’s equinor have also outlined the respective plans to reduce renewable expense in favor of oil and gas.
