Highfields Capital Management's positions in the fourth quarter (Part 5 of 8)
Highfields Capital Management and Royal Dutch Shell
Jonathon Jacobson’s Highfields Capital Management’s top new purchases are Air Products & Chemicals, Inc. (APD), Broadcom Corporation (BRCM), Applied Materials, Inc. (AMAT), Royal Dutch Shell (RDS.A), and JPMorgan Chase (JPM). Highfields also sold out positions in CBS Corporation (CBS) Hess Corporation (HES).
The firm established a new 1.38% position in oil producer Royal Dutch Shell (RDS.A) in its $12.3 billion portfolio last quarter.
The company plans to sell $15 billion of its assets between 2014 and 2015, restructure its shale operations in North America, and put its Arctic exploration on hold for 2014. Shell has spent around $4.5 billion exploring for oil off the coast of Alaska since 2005, but has faced strong environmental opposition.
In a release, van Beurden said the landscape the company had expected has changed. Factors such as the worsening security situation in Nigeria in 2013, and delays to non-operated projects in several other countries, have altered the outlook. Oil prices remain high globally, but North America natural gas prices and associated crude markers remain low, and the industry refining margins are under pressure. Restructuring and improving profitability in North America Upstream resources plays, and Oil Products world-wide, is a particular focus for the company.
Capital spending will be reduced. In 2013, this totaled $46 billion, including $8 billion of acquisitions. In 2014, Shell expects total capital spending of around $37 billion, including $2 billion of previously announced acquisitions.
Shell has distributed more than $11 billion to shareholders in dividends and repurchased $5 billion of shares in 2013. Reflecting confidence in the potential for free cash flow growth in 2014, the company is expecting the 1Q 2014 dividend to be $0.47 per share, an increase of over 4% compared to 1Q 2013, and total dividends announced for 2014 to be potentially over $11 billion.
Shell, Exxonmobil (XOM), and Chevron (CVX) saw fourth quarter profits drop due to rising capital expenditures, lower production, and weak refining margins.
Browse this series on Market Realist:
- Part 1 - Must know: Highfields Capital’s positions in the fourth quarter
- Part 2 - Why Highfields initiated a position in Air Products & Chemicals
- Part 3 - Must know: Why did Highfields Capital open a position in Broadcom?
- Oil, Gas, & Consumable Fuels
- Commodity Markets
- Royal Dutch Shell
- Highfields Capital Management
- Broadcom Corporation
- fourth quarter
- North America