👉 Background: BP, previously called British Petroleum, is one of the UK’s largest oil and gas companies, pumping oil and gas since. On the flip side, Shell was started at a similar time (back in 1907) and is also one of the largest oil and gas companies in the world. These two have been the OG oil rivals – the Coke and Pepsi of petrol.

‍👉 What happened: While they were once bitter rivals, they’ve gone down different paths over the past few years. Shell has dialled down its climate targets and focused on its profits while BP has been trying to reinvent itself as Captain Net Zero as it pivoted hard into renewables. Over the past year ,this pivot has resulted in a 30% decline in their share price.

‍👉 What else: So now, Shell is reportedly chatting with advisers about whether to make a bid for BP. With BP’s current market value at ~£57 billion, this would be a huge takeover. But, never say never because activist investors are pushing for big changes at BP HQ.

‍

‍What's the key learning?

‍

‍💡Activist investors are shareholders who use their equity stake in a company to pressure management for change. Elliott Investment Management which owns of 5% stake in BP, is one of the most well-known activist firms.

💡Elliott Investment Management have used their activist playbook across a number of companies like Twitter, Pernod Ricard and Samsung:

• Step 1: Buy a stake in the company
• Step 2: Go public with the demands for change
• Step 3: Push for moves that will increase shareholder value like a major strategic shift, big asset sale or even a merger
  

💡While activist investors are considered a little controversial, we know they often get results. In fact, Elliott's top 50 weighted holdings achieved nearly a 17% three-year annualised return.