BHP Billiton: Hole in the ground

Production volumes are up massively. Revenues have doubled, despite the massive pullback since 2011. By almost any measure, BHP is a bigger company than it was in 2004. China clearly happened. But in terms of shareholder wealth, the one that matters, it’s all been for nought, or close enough. BHP's share price is back at 2004 levels. Chinese demand didn’t create untold wealth (in the long run), but rather induced investment by the majors to the point of malinvestment. It’s a cycle that has repeated endlessly over the eons. That’s why the major task for successful investors is to make the distinction between high quality businesses—those with pricing power and a moat—from run of the mill commodity price-takers. In the short term, they can be easy to confuse. But long term, only the high quality businesses can turn an economic tailwind into outstanding shareholder returns. (VIEW LINK)

Forager Funds 

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Founder & Chief Investment Officer

Steve began Forager Funds in 2009, and now manages approximately $470m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.

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