BHP Offers a Rich History but Mediocre Investment Returns

John Robertson


BHP Billiton is one of the first stops for professional money entering the resources sector globally, along with being the most widely held stock by Australians. In attracting investors, BHP continues to take advantage of its historical positioning rather than offering an outstanding financial performance. The recently reported 2015/16 operating results imply having to outlay around US$110 billion in equity and additional capital over 10 years to get back something like US$112 billion before tax. Take out tax and German government bonds with a negative yield look more appealing. Even with an immediate 50% rise in the prices of its main outputs, the company’s financial return would be equivalent to buying a bond with a yield slightly below 6%. BHP Billiton is in the midst of making a very lengthy transition from being a globally recognised proxy for the Australian market to being a rather mediocre resources sector investment with neither strong financial returns nor abnormal leverage to changes in cyclical conditions. But, for the time being, it relies on the lingering effects of size and history to retain investors.

2 topics

John Robertson
John Robertson

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment