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Hess: From a Mess to a Prize

Stocks in this article: HES OXY

The letter includes numerous comments from Wall Street analysts who support the company's, and the current board of directors', agenda. This is all under the sub-heading "HESS has the right plan to deliver shareholder value."

If you're a shareholder or a potential investor you'll want to read the entirety of the letter. From this analyst's perspective it appears that HES' officers and board awakened to the frustration of shareholders a little bit too late. The following paragraph from the letter should have been instituted a year ago!

Hess is currently undergoing a multi-year transformation into a pure play E&P company. As part of this transformation, we recently announced additional value enhancing initiatives that will further streamline the company and leave Hess with a portfolio of higher growth, lower risk, oil linked E&P assets.

Singer's claims about the Hess board nominees are also discussed in Hess' letter. Back on March 6 Singer and Elliott Management denied Hess' charges that they were planning to liquidate the company. Elliott Management has accused Hess of using "scare tactics" to motivate company shareholders.


Any way you slice this ongoing dispute, HES as a company and as a stock hasn't been overwhelming anyone for a long time. In 2012 its TTM profit margin was a paltry 5.37% and its return on assets an underwhelming 5.6%.

On April 22 it will report its first-quarter 2013 earnings results. The analyst community's consensus estimate on EPS versus the year-ago quarter is for a gain of around 4%. Yet, the same consensus estimate on sales profits and revenue is forecasting an average of nearly a 4% decline.

As of March 28, Hess owns 10.59% of the shares outstanding, or 36,483,759 shares. HES closed Wednesday at $72.03 and shares are nearing the 52-week high of $72.63.

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