Hess Corp. call-option trading surged to the highest level since April as Paul Singer’s Elliott Management Corp. presses for a strategic review that could include selling all or parts of the company.
The volume of Hess calls changing hands today rose to almost 45,000 contracts, the most in more than nine months, according to data compiled by Bloomberg. Hess shares climbed 1.5 percent to $67.96. The most-active options were $70 calls expiring after the close of trading on Feb. 15.
Singer’s Elliott took a 4 percent stake in New York-based Hess last month, making it the second-largest shareholder. The activist investor has been joined by Relational Investors LLC, which holds about a 2 percent stake, in calling for the company to overhaul its board. Elliott has proposed a slate of five new board members and said Hess should streamline its business through asset sales.
The company should spin off its U.S. shale business and sell gasoline stations and its energy market unit, according to a Jan. 29 letter Elliott sent to Hess shareholders.
“You have an activist shareholder that is pushing for changes in the company and that has caused investors to have an improved outlook,” Brian Youngberg, an analyst at Edward Jones in St. Louis, said in a telephone interview. Those changes could include “more drastic steps including spinning off assets, selling assets or potentially putting the company up for sale,” said Youngberg, who rates the company a “buy” and doesn’t own shares.
Jon Pepper, a Hess spokesman, declined to comment on the reasons behind the increase in call option trading on the company.
Chairman and Chief Executive Officer John Hess has rejected Elliott’s demands, and said Jan. 30 that he wants to keep the company’s offshore oil fields and its production assets in North Dakota’s Bakken shale.