a job: Philips 66 It is a power and logistical manufacturing company. It works through the following sectors: mid -road, chemicals, refining, marketing and specialties (M&S). Midstream provides crude oil, the transportation of refined petroleum products, orange and processing services, as well as natural gas and natural gas liquids (NGL), storing, collecting, collecting, processing and marketing marketing service. The chemicals sector consists of 50 % stock investment in the company at Chevron Phillips Chemical Company LLC (CPCHEM), which manufactures and markets petrochemical and plastic on a global basis. The refining company refines crude oil and other raw materials in petroleum products, such as gasoline, distillation, airline fuel, as well as renewable fuel, in 12 refinery in the United States and Europe. Finally, the purchases of the marketing and specialties sector to resell refined petroleum products and renewable fuel.

Market value shares: $ 52.88 ($ 128.04 per share)

ownership: ~ 4.6 %

Average cost: us

Activist’s comment: Elliot is a very successful active investor. The company’s team includes analysts from private technical stock companies, engineers and operating partners – former technology executives and Coos. Upon evaluation of investment, the company also rented specialization and public administration consultants, experts and industry experts. Companies are often seen for many years before investment and have a wide -ranging stable from the admired board candidates. Elliot historically focused on strategic activity in the technology sector and was very successful in this strategy. However, over the past few years, the company’s activity group has grown and is doing a lot of activity directed towards governance and creating value from the level of the plate in a much larger range of companies.

On February 11, Elliot I released a message The presentation to the Phillips 66 board that determines “Streamline66”, a plan to solve the company’s continuous practices of weak performance and poor companies despite its portfolio of attractive assets. The following steps include: (1) Simplification of the company’s portfolio by selling or crossing for medium works, in addition to a possible sale of its interest in CPCHEM; (2) Starting the operation review by adhering to ambitious refining objectives and closing the EBITDA-Per Barrel with its peers; And (3) increased control and enhancing the accountability of the Phillips 66 management team by adding two new independent managers to the council.

Phillips 66 (PSX) is a power and logistical manufacturing company. The company maintains four valuable sectors, each of which provides the ability to expand and determine strong competitiveness. Its sector in the middle of the road runs built -in natural gas to water (NGL) integrated water through Permian and DJ ponds. The chemicals sector includes the CPCHEM joint petrochemical project on a global scale. The refining segment is one of the largest refining systems in the United States, and the marketing and specialties sector consists of a marketing flower and specialized product production. Despite the attractiveness of these assets individually, Phillips is circulating with a great discount to assess them for the total. While approximately 70 % of the company’s profits before the benefits, taxes, depreciation and extinguishing come from the multiple installment in the middle of the road, chemicals and marketing, which are trading up to 10 times EBITDA, PSX trades closer to its double than the lowest refining value of the part in 6.6 -Times. As a result, the company has greatly reduced the average of its nearest peers, Valero Energy (Vlo) and MARATON Petroleum (MPC), at 9 % cumulative, 33 %, and 97 % over 1-, 3-3-3. – And 5 years in a row.

Elliot first shared PSX publicly in November 2023, when the company sent a letter to the board of directors announcing its investment of $ 1 billion in the company. He criticized ELLIOTT PSX for its history of weak performance, citing issues such as moving away from and being badly ready to take advantage of the superior refining cycle on 22 and ’23, and the high refining operating expenses (Opex) per barrel with absolute and relative barrel compared to their VLO and MPC peers, and increased costs for For peers in the wake of the cost reduction program. Elliott witnessed a possible share price for more than $ 200 per share at the time, but the company participated in Wall Street that PSX was primarily an implementation story.

Nevertheless, Elliott behaves the way we want active shareholders, instead how many see it. The company gave the CEO of Mark Lacher the opportunity to show a meaningful progress on its $ 14 billion goals from Ebitda in the middle of the session by 2025, strip 3 billion dollars of non -essential assets and increase the long -term capital return policy of PSX. They quickly agreed and provided with the company to add two new managers who have experience refining to the council. The company, Robert Biz, former CEO of Cenovus, added to the Board of Directors in February 2024And he agreed to continue working with Elliot to determine a second exit in the coming months. The second exit was not achieved.

Now, after more than a year has passed, Elliott increased from its location to $ 2.5 billion and will become more active in creating the value of shareholders, issuing a public letter and a presentation of “Stropline66”. Elliott determines three basic sources for PSX weakness. First, the company argues that the fundamental value of the company has been blocked through its inactive structure, which led to the circulation of information technology in line with the lowest multiple refining sector, although the majority of profits before benefits, taxes, destruction and live consumption coming from its other excellent work. Second, PSX operating performance failed to achieve management goals and continued peer profitability. In 2024, PSX delivered the annual modified EBITDA that ranged between $ 4.5 billion and $ 8.7 billion, less than its average goal of $ 14 billion. Opex has risen for a barrel in two consecutive quarterly, and the gap has expanded in profitability per barrel per barrel against Vlo. Third, Elliot confirms that the continuous claim to the administration for a successful transformation without any concrete financial results has led to the erosion of their credibility with investors. The company also said that the board of directors failed in basic supervision duties, and to reward the administration with separate compensation for the company’s performance.

This is what prompted Elliot to issue his three plan with three aspects of three aspects to: (1) simplifying the PSX portfolio, (2) reviewing the operational performance taking into account the margin improvements, and (3) improving management credibility with the addition of new managers. First, Elliott suggests that it rotate or sell the PSX Midstream assets, and you can save approximately $ 40 billion to $ 45 billion as an independent list or in the sales of the strategic buyer. In addition, Elliott also suggests the sale of CPCHEM and Jet, which is estimated that the net revenue of $ 48 billion of three assets will equal 96 % of the maximum of the company’s current market. This amount of PSX capital can be allowed to purchase between 60 % and 90 % of the eligible company shares and increase the payment ratio to 100 % of the free cash flow such as its refining peers. Through the improved supervision that was enabled by adding two experienced managers in industry and operational, PSX can go on the right track towards improving EBITDA for the barrel and progressing towards refining targets.

Elliott estimates that this plan can result in an arrow price of about $ 200 per share. Moreover, the company confirms that if PSX has implemented the Playbook Elliott book that works in its participation in MPC, the shares may increase to more than $ 300. In Marathon, Elliot helped to facilitate the addition of a new outlet, to move to the new CEO, close the gap in the Ebitda barrel with VLO, retired 50 % of his existing shares since 2021, and sell the fast retail process for $ 17 billion in cash revenues after taxes. Since Elliot She sent her first message to the marathon On November 21, 2016, MPC outperformed VLO and PSX by 56 % and 116 %, respectively.

The presence of a good plan is the first step, and it is implemented by another story. This time, Elliott will not settle for one of the managers or directors, especially after PSX failed to follow the agreement last time to add a second exit with a colander experience. Elliot gave the administration time to implement. The administration failed. Now, Elliot will do what the Board of Directors is supposed to do, but he did not: the responsibility of the administration. Elliott does not explicitly mention that he is looking forward to replacing senior management, but discusses the credibility of damaged management and affects the investor’s confidence, and it is difficult to fix it without replacing the administration. Moreover, Elliot does He cited the replacement of the CEO As the first element, it led to a successful shift in their associations in a marathon and Suncor. With the company’s nomination window this week and four managers in the Board of Directors consisting of 14 people for election, we expect Elliot to nominate a full list of four managers, if not only maintains its options while discussing governance with the Board of Directors.

Ken Squire is the founder and head of 13D Monitor, an institutional research service on shareholders ’activity, founder and manager of the 13D activist Fund portfolio, a joint fund that invests in a set of 13D active investments.