Fresh off a successful fight with Yahoo! that resulted in a new chief executive and seats on the Internet company’s board, hedge-fund manager Dan Loeb has zeroed in on a new potential target: the oil and gas explorer Murphy Oil.
In an investor letter disseminated midafternoon on Wednesday, Third Point founder Loeb disclosed a “significant stake” in Murphy , adding that his company had “recently filed” for federal approval to increase the size of that stake.
Murphy Oil has opportunities to increase its stock price, Loeb asserts in the letter, because its current asset mix is cumbersome and makes the company hard to value.
Loeb’s position in Murphy is close to, but not quite, 5 percent, according to someone familiar with the matter. A Murphy spokesperson did not immediately respond to requests for comment.
Investors seemed to applaud Loeb’s involvement. Shares of Murphy began sailing after news of Loeb’s potential activist stance on the explorer first broke at about 3:20 p.m. on Wednesday. Within the first half hour afterward, Murphy shares were up more than 4 percent on the New York Stock Exchange.
In the letter, Loeb lays out a four-part plan for increasing the worth of Murphy, beginning with selling the company’s retail business, which the fund manager argues maintains sentimental, but not literal, value to the company. (To emphasize his point, Loeb quotes some lyrics from the 1980s band Boys II Men: “Although we’ve come to the end of the road/Still I can’t let you [sic] go…”)
Murphy’s network of more than 1,100 filling stations could create considerable value for the company’s shareholders, Loeb argues, and has little bearing on the company’s more core business of exploring and producing liquids. (Read More: The Fracking of America.)
Loeb’s other suggestions include selling Murphy’s Canadian natural-gas assets, selling its stake in the Syncrude Oil Sands project, and completing a U.K. refining business exit that is costing Murphy $500 million in working capital.
—By CNBC's Kate Kelly