GMO LLC: “Shell is at a Very Attractive Valuation Levels”

Grantham Mayo Van Otterloo & Co. LLC, an asset management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. In its first-quarter letter, the fund mentioned that there are always risks in the resources sector, and they believe investors are likely to be rewarded with a compelling mix of strong returns, inflation protection, and diversification. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, GMO LLC mentioned Shell plc (NYSE:SHEL) and explained its insights for the company. Founded in 1907, Shell plc (NYSE:SHEL) is a London, United Kingdom-based multinational oil and gas company with a $215.8 billion market capitalization. Shell plc (NYSE:SHEL) delivered a 33.59% return since the beginning of the year, while its 12-month returns are up by 43.44%. The stock closed at $57.98 per share on June 10, 2022.

Here is what GMO LLC has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:

“The market is simply not valuing resource companies at reasonable levels given any plausible base case for how the world might play out, in our opinion. With oil prices up around 65% and natural gas prices up hundreds of percent since the beginning of 2020, Shell (NYSE:SHEL), a bellwether for the oil and gas industry, is more or less flat. With the movement in oil and gas prices, one would have expected Shell’s stock price to surge. It didn’t, however, leaving Shell at very attractive valuation levels. At commodity prices as of the end of the first quarter, Shell would be cranking out free cash flow yields of 22-23% for the next few years according to our models.”

Photo by Marc Rentschler on Unsplash

Our calculations show that Shell plc (NYSE:SHEL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Shell plc (NYSE:SHEL) was in 37 hedge fund portfolios at the end of the first quarter of 2022, compared to 41 funds in the previous quarter. Shell plc (NYSE:SHEL) delivered a 13.84% return in the past 3 months.

In May 2022, we also shared another hedge fund’s views on Shell plc (NYSE:SHEL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.