By Svea Herbst-Bayliss

NEW YORK (Reuters). Daniel Loeb is an activist investor who supports Royal Dutch Shell Plc’s dissolution. He applauds the decision of Royal Dutch Shell to move its headquarters. However, he maintains that a more efficient corporate structure would be better for it.

Loeb said that in October, his hedge fund Third Point LLC took a $750m stake in the company. He told his investors Friday that he had added to his Shell stake, and that he was in discussions with board members, management and shareholders.

Reuters saw the letter on Saturday. It called the conversations “constructive”, and stated that while the stock price of the company is low, it sees potential gains with proper management.

Loeb believes that Shell could achieve greater success with a new corporate structure. Loeb supported Shell’s decision to relocate its headquarters to the UK. He also supported the formation of one shareholder class.

The letter stated that this move allowed for greater flexibility in its portfolio modification (either asset sales or spinoffs), and allows for more efficient capital return, particularly via share repurchases.

Loeb stated publicly in October that Shell would reap the benefits of separating its liquefied, renewables, and marketing businesses into separate companies, which would also allow it to be separated from its legacy business. This view was shared by many shareholders, he wrote.

Loeb also stated that current geopolitical developments underscore the strategic significance of having reliable energy supply, particularly in Europe. “Shell’s LNG (liquid natural gas) business, the largest in the world outside of Qatar, will play a critical role in ensuring energy security for Europe,” the letter said.

Loeb is updating his clients for the first time since announcing the Shell investment.

Loeb stated that his company has increased its investments in energy stocks, and other stocks that can benefit from higher inflation and supply shortages as well as a shift to more renewable energy sources.

Although Third Point Partners’ Fund experienced a decrease of 11.5% over the quarter ended March 31, the letter indicated that it had avoided larger losses during April, when the fund dropped by 1%. The broader fell by 8%.

Third Point decided to exit large equity positions. Instead, it made an investment in Glencore mining company (OTC) to help the company transition to renewable energy. With its improved ESG profile and strong cash returns for shareholders and settlements, he expects that the company can catch up with other mining companies.