Crude intentions
Boardroom brawl at Phillips 66
Good morning, captains of crude. This is your Stock Market Rundown for December 6th, 2023. Thank you, once again, for reading. Let’s dig in:
TODAY’S TOP STORY: CORPORATE COUP D’ETAT
An investing battle is shaping up in the octagon of capital markets. In one corner, we’ve got Phillips 66, the multinational energy company. As a major US refiner, it turns crude oil into the petroleum products that fuel America (insert patriotic flag emoji here).
In the other corner, we’ve got Elliott Investment Management. Elliott is what’s known as a activist fund: they sift through markets for potentially-profitable investing situations, sometimes watching from the sidelines for years before they pounce and buy a chunk of the stock. Then they lobby for changes that can unlock big profits. This high-stakes strategy has built vast fortunes.
Why did Phillips 66 become a target for Elliott’s activist clay-shooting? Well, Phillips 66 has underperformed refining-industry peers due to out-of-control costs, and Elliott claims the management team is to blame.
Gunning for change, Elliott just bought up a billion-dollar stake in the refiner, then wrote a scathing letter to Phillips 66’s execs, charging that their bonehead moves are “shaking investor confidence.” This is a worse public humiliation than when I got dragged on Facebook by my sister-in-law for serving a dry Thanksgiving turkey. (Just put more cranberry sauce on it, Andrea!)
Elliott’s letter sniffs that they’re seeking “enhancements” to the board—namely, putting two of their guys on it, to whip this C-suite into shape. Phillips 66’s response was that they’re open to “constructive dialogue.” They no doubt realize that, since Elliott’s activist campaigns often end with execs getting canned, they’d better play nice.
It’s just how running a public company works, folks: if you’re doing an atrocious job as an operator, somebody might come along and topple your rule. That’s the beauty of shareholder democracy… one share, one vote.
SO WHAT ELSE IS GOING ON?
Fast-fashion shopping site Shein has filed to go public, potentially raising up to $90 billion. Hopefully the stock will be a better investment than the app’s $3 dresses that don’t survive a spin cycle.
Thanks to rates stabilizing, the price of gold is at a six-month high—hope you’re already finished all your buying for Indian wedding season.
Amazon’s cloud computing arm is offering businesses a chatbot that has guardrails to filter taboo content. Sounds like a big improvement from chatbots that make confessions of love or provide bomb-building instructions.
A Virgin Airlines plane just flew from London to New York powered by “sustainable” fuel made of used cooking oil and waste animal fat. Who knew you could pilot a trans-atlantic route using only the stuff left in the pan after you cook bacon and onions?
That’s it for today, my friends; catch you back here at the usual time tomorrow morning. Yours in capitalism, The Axe
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Hit me up at theaxe@stockmarketrundown.co