Shareholder activism can be a wonderful thing when it’s done right. Known for its iconic green-and-white trucks, Hess (HES) had been stuck in neutral as its peers dove head-first into shale production and “sexier” unconventional resource plays. HES stock languished and was passed by in many portfolios.
Enter activist hedge fund Elliot Management. After calling management at HES inept, Elliott pressured the firm to focus on its core business of E&P operations and reduce its exposure to refining, marketing and other ventures. After a bitter proxy battle, the two came to an agreement and Hess began divesting assets and shifting focus.
Well, those efforts seem to have delighted investors, as HES stock has surged more than 48% year to date.
Given those huge gains, investors may want to trim back their position in HES shares — especially given Hess’s recent weak earnings guidance. For the fourth quarter, HES estimates that it will realize a $6 per barrel decrease in its average selling price for crude, in addition to pumping out less oil than expected. All in all, HES will earn than it did in the third quarter.
For investors, the time to sell some HES stock is now if they want to capture those hefty gains.