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Here’s Why BP plc (ADR) (BP) is Trending Today

BP plc (ADR) (NYSE:BP) is in the spotlight after the company agreed to sell a key pipeline system in the North Sea for $250 million. Specifically, the buyer, Ineos AG, will pay $125 million in cash on completion, and up to $125 million in earnings share over the next seven years. BP also has the rights to continue to use the pipeline. CEO Bob Dudley said, ‘While the Forties pipeline had great significance in BP’s history, our business here is now centered around our major offshore interests west of Shetland and in the central North Sea’.

By doing the asset sale, BP plc (ADR) (NYSE:BP) strengthens it balance sheet, and makes its dividend a little safer in the near term. The divestment will also sharpen BP’s focus on its current production/refining activities. Because the size of the sale isn’t exactly big versus BP’s market cap, BP plc (ADR) (NYSE:BP) stock will likely remain dependent on integrated sentiment, as well as oil prices.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

According to our data, not many smart money funds owned BP at the end of Q4 (perhaps due to the fact that BP is an international company). Of the 742 smart money funds in our database, 26 had a bullish position in BP plc (ADR) (NYSE:BP) at the end of December, down 4 funds from the previous quarter.

The Bottom Line

BP plc (ADR) (NYSE:BP) is in the spotlight due to an asset divestment. The divestment will further strengthen BP’s balance sheet and sharpen its focus. For more oil related reading, check out the ‘10 Largest Oil Tanker Shipping Companies In The World‘.

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