Shell PLC (NYSE: SHEL) is in focus this morning after activist investor Elliott Investment Management announced a sizable short position in the British oil major.
Elliott has built an £850 million ($1.1 billion) position against the company based out of London, UK.
The news arrives only weeks after the asset manager revealed a close to 5.0% stake in peer BP plc (LON: BP).
Shell stock is down less than 1.0% following the Elliott news on Friday.
Elliott’s short position is not a critique of Shell
Elliott’s bet against Shell likely has more to do with risk management than critique, according to Quilter Cheviot’s energy and materials analyst Maurizio Carulli.
“When a hedge fund creates a long position, they need for risk management purposes to create an opposite position, i.e., a short, into a similar company,” he told clients in a research note today.
The activist investor first built a stake in BP, and now it’s choosing to short Shell to offset that long position for risk management.
Otherwise, macro factors, including changes in oil prices could result in a significant loss for Elliott Management, he clarified, adding “they now have some protection.”
The oil stock is currently up more than 10% versus the start of this year (2025).
Elliott also has a short position in TotalEnergies
Note that Elliott Management recently disclosed a short position in the French oil and gas titan TotalEnergies for similar reasons as well.
Neither Shell nor the activist investor has officially commented on the news so far.
Elliott is making moves in the European energy stocks at a time when their managements are rolling back on their ambitious plans of accelerated switch to renewables, and starting to spend again on fossil fuels.
Shell, for example, reiterated plans of increasing LNG output last week.
At the time, it also confirmed plans of spending just 10% of its capital employed on low-carbon initiatives – down sharply from 20% originally.
What to expect from Shell stock in 2025?
Elliott’s short position suggests it stands to profit if Shell stock price declines moving forward.
But analysts are not sure if that will happen.
The consensus rating on Shell currently sits at “buy” with the mean target of about $83 indicating about a 14% upside in the company’s US listed shares from current levels.
Earlier in March, Shell announced plans of increasing shareholder distributions from 40% tops to up to 50% and growing free cash flow on a per-share basis by over 10% annually through the end of this decade.
However, Shell’s income did decline significantly in 2024.
The oil major earned $23.72 billion (adjusted) last year, down from $28.25 billion in 2023.
The London-listed firm attributed much of that weakness to lower oil prices.
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