3. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 37
PE Ratio: 5.62
Free Cash Flow TTM: $35.8 Billion
Shell plc (NYSE:SHEL) is an energy and petrochemical firm. The firm posted earnings for the second quarter of 2022 on July 28, reporting earnings per share of $3.06, beating market estimates by $0.26. The revenue over the period was $100 billion, up more than 65% compared to the revenue over the same period last year and beating analyst expectations by $17.7 billion. The company also announced that it expected $6 billion in share buybacks to be completed by the end of the next quarter.
On July 29, investment advisory RBC Capital maintained an Outperform rating on Shell plc (NYSE:SHEL) stock and raised the price target to GBP 3,200 from GBP 3,100. Analyst Biraj Borkhataria issued the ratings update.
At the end of the first quarter of 2022, 37 hedge funds in the database of Insider Monkey held stakes worth $5.6 billion in Shell plc (NYSE:SHEL), compared to 41 in the previous quarter worth $2.6 billion. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Shell plc (NYSE:SHEL), with 19.5 million shares worth more than $1 billion.
In its Q1 2022 investor letter, Third Point Management, an asset management firm, highlighted a few stocks and Shell plc (NYSE:SHEL) was one of them. Here is what the fund said:
“We have continued to add to our position in Shell plc (NYSE:SHEL), as it trades at the same deeply discounted multiple today that it did last year due to a move up in commodity prices. We are engaged in discussions with management, board members, and other shareholders, as well as informal talks with financial advisors. We have discussed various alternatives with the aim of both increasing shareholder value and allowing Shell plc (NYSE:SHEL) to effectively manage the energy transition. We have reiterated our view that Shell’s portfolio of disparate businesses ranging from deep water oil to wind farms to gas stations to chemical plants is confusing and unmanageable. Most investors we have discussed this with agree that the company would be more successful over the long term with a different corporate structure. Discussions among the parties have been constructive and will be ongoing since stakeholders clearly see these corporate changes as instrumental, particularly if Shell plc (NYSE:SHEL) wishes to become a leader in the energy transition rather than be left behind as a tarnished legacy brand.
Beyond our discussions around corporate structure, there have been two important developments since our last update. First, Shell plc (NYSE:SHEL) announced a plan to redomicile its headquarters to the UK and create a single shareholder class. This move allows greater flexibility to modify its portfolio (either through asset sales or spin-offs) and allows for a more efficient return of capital, specifically via share repurchases. Second, fundamental and geopolitical events have highlighted the strategic importance of reliable energy supplies, especially in Europe. Shell’s LNG business, the largest in the world outside of Qatar, will play a critical role in ensuring energy security for Europe. In our view, the value of Shell plc (NYSE:SHEL) has increased dramatically since our original investment.
While Shell plc (NYSE:SHEL) continues to trade at a large discount to its intrinsic value, with proper management we believe the company can simultaneously deliver shareholder returns, reliable energy and decarbonization of the global economy. We look forward to continued engagement with management and other shareholders and to more strategic clarity from Shell plc (NYSE:SHEL).”
