Proactive Investors - Phillips 66 (NYSE:PSX) shares jumped 6% to $129.30 in late-afternoon trading on Thursday, following a nearly 4% gain the session before, after activist investment firm Elliott Investment Management announced a $1 billion stake in the diversified energy company.
Elliott said it is seeking two board seats in a bid to help boost improved execution and performance at Phillips 66 (NYSE:PSX).
"Phillips 66's performance has declined as it has shifted its focus away from its refining segment," Elliott wrote in a letter to the Phillips board, adding that its stock price has "meaningfully underperformed its peers."
Elliott Management cited Phillips 66's increasing operating expense per barrel, the industry metric used to compare operating efficiency, as a big concern.
The Phillips 66 board and management team responded with a list of its recent accomplishments, including returning at least 50% of operating cash flow to shareholders.
For its part, the activist investor noted that Phillips 66 CEO Mark Lashier's 2025 goals for the company are "correct" and that currently the CEO along with the management team "deserve investor support so long as they demonstrate meaningful progress against these targets."
Shares of Phillips 66 have gained 28% year to date.