Elliott Takes On Hess, Nominates Director Candidates

Jan 29 2013 | 12:10pm ET

Elliott Management isn't only after Argentina. The activist hedge fund has launched an effort for a major shakeup at oil giant Hess Corp.

Elliott has bought up a 4% stake in Hess and today demanded broad changes at the company, starting with its board of directors. Elliott has nominated five candidates which it said would help focus a "distracted" company; the hedge fund said that Elliott's stock price could double if it makes the right moves.

Those moves should include the sale of Hess' retail operations and its share of North Dakota's Bakken Shale.

"If managed appropriately, we believe the equity value of Hess could be up to $126 per share—a massive premium to where the shares currently trade in the market," Elliott wrote to Hess shareholders. "But reclaiming this shareholder value requires substantial strategic change."

Elliott savaged Hess' management, criticizing its failure to focus exclusively on its core exploration and production business. And the hedge fund isn't too pleased with what it has done there, either, accusing Hess of destroying shareholder capital in "its failed exploration program."

"Ignoring exploration best practices, Hess disregarded the opportunity to learn that the rest of the industry might not have thought too highly of the holes into which the company was pouring billions of dollars of shareholder capital," Elliott wrote.

And it took aim at its board, blasting it for its "failure to oversee management and hold it accountable for over a decade of failures."

Elliott's intervention comes just a day after Hess said it would sell its fuel terminal network. Hess said it learned last week that Elliott might buy a stake and nominate a slate of independent directors.


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