Activist investor Elliott Investment Management has disclosed a $1 billion stake in Phillips 66 and criticized the company for underperformance [baad05e8]. This marks the third Houston company that Elliott has targeted this month, following Crown Castle and NRG Energy [baad05e8]. Elliott suggests appointing two new directors with experience in running refining operations to address investor concerns [baad05e8]. If Phillips 66 fails to meet its 2025 targets, Elliott warns that the company could face similar consequences as Marathon Petroleum, which replaced its CEO and sold its Speedway retail operations after clashing with Elliott in 2019 [baad05e8]. Phillips 66's focus on non-core businesses like chemicals and pipelines has hindered its ability to take advantage of strong refining margins [baad05e8]. The company's investments in multiple areas have spread its focus thin [baad05e8]. Elliott's stake in Phillips 66 is worth less than Vanguard Group's 9% stake in the company [baad05e8].
Despite the criticism, Phillips 66 CEO Mark Lashier is said to deserve investor support, but investors are skeptical of his efforts to improve profits [baad05e8].
This latest development highlights Elliott Investment Management's continued activism in the financial industry, targeting underperforming companies and advocating for changes to improve shareholder value. Phillips 66's focus on non-core businesses and its failure to meet investor expectations have drawn Elliott's attention, prompting the firm to propose new directors with relevant experience in refining operations. The outcome of this engagement will determine the future direction of Phillips 66 and whether the company will face similar consequences as Marathon Petroleum if it fails to meet its targets [baad05e8].