By Myriam Robin From Financial Review

It’s been 16 months since the famed (and feared) Elliott Associates burst on to BHP’s register demanding big changes. But for the past six, the New York based and Cayman-Islands domiciled hedge fund headed by Paul Singer has been as quiet as a mouse. Or an institutional shareholder.

Its still invested, keeping everyone on their toes. The hedge fund’s last declared interest in BHP Plc (the UK-listed company company) was 5.45 per cent of its voting rights. And while it hasn’t said much since its calls for collapsing the Big Australian’s dual listing were rebuffed, its website calling for such remains online, while those near BHP’s Melbourne HQ still spot trams from time to time covered with Elliott’s Fixing BHP advertising.

However, Elliott has achieved some of what it wanted and now stands to reap the windfall. Which, given the sheer size of its stake in one of the world’s largest companies, promises to be substantial.

It called for BHP to sell its troublesome US shale assets, which has happened. BHP chief Andrew Mackenzie has promised to pass the net proceeds of the $US10.8 billion ($14.69 billion) sale back to shareholders, giving Elliott $US168 million or so reasons to stick around.

And on regular dividends, given its declared holdings at the time Elliott would have received $US42.6 million last September, $US49.5 million earlier this year, and stands to reap another $US67.1 million next month.

That’s $US327.2 million, or $448.8 million, in dividends potentially, assuming BHP gives back $US10 billion from the US shale sale to investors (of which 42 per cent would go to BHP Plc holders).

On the share price, we don’t know how much Elliott paid for its stake, but BHP’s London shares have in recent months been testing their highest prices since 2014 and are up 26.1 per cent since Elliott outlined a position in filings last August (after declaring an “economic interest” in April). Elliott in February also declared holding 16.8 million voting rights through contracts for difference (highly leveraged financial instruments that magnify gains or losses). Given the share price increases, Elliott should have made a killing on the CFDs, though the exact extent of which would depend on its level of leverage.

However, there is what Elliott hasn’t declared to consider. The exact interests of hedge funds are notoriously opaque. Maybe, for example, it went short on Australian BHP shares, as a way to directly capitalise on the dual-listing collapse strategy it advocated. The Australian shares have gone up strongly too; if Elliott did short them while going long in London, this would drag on its overall gains.

But many believe (or hope) Elliott’s silence suggests a satisfied hedge fund, well ahead and perhaps considering departing once it gets that final US shale windfall. BHP CFO Peter Beaven is meeting Elliott in London as part of the coming fortnight’s results roadshow. Suppose he’ll find out what Singer and crew think then.

This piece was updated to reflect the fact that Elliott owns 5.45 per cent of BHP Plc, which comprises 42 per cent of BHP as a whole.

IMAGE: For the past six months, the New York based and Cayman-Islands domiciled hedge fund headed by Paul Singer has been as quiet as a mouse. AP

For more on this story go to: https://www.afr.com/brand/rear-window/elliott-could-gain-900-million-in-bhp-dividends-alone-20180822-h14b78