Overstone International Value Fund on Shell plc
Thesis
Shell fell during the quarter as the Middle East ceasefire drove Brent oil down from its peak. The fund nevertheless believes Shell remains attractively valued at current oil prices. It points to a low-double-digit free cash flow yield as the central valuation support. The idea is therefore a value exposure to a large energy producer despite near-term commodity weakness.
“At current prices, both BP and Shell still offer attractive returns with low double digit free cash flow yields.”
Key risks
- Lower oil prices can pressure earnings and free cash flow