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BHP results

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Not applicable
Go figure, BHP reports a mammoth 60% increase, with $12bn in cash - wow. Prior to results, BHP was sitting on a PE of 17, so we can figure that it now sits on a PE of about 12 probably - which is its long term average. So is BHP a buy? Market reaction today would indicate otherwise - go figure! Seems to be a lot of perception out there about a commodity bubble. Do people really think such a bubble will unwind itself overnight?
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10 REPLIES 10
DEP
Super Contributor
Bhp is buying back its shares... they know best. I am holding on... lots of leg left on this one.
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DR_1
Super Contributor
When a company buys back shares, the value is most likely to increase as there is less in circulation. They are buying back a significant portion.
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Guji23
Not applicable
Won't the share decrease if the Co. is buying back the share and it depends on how much the Co. is willing to offer the shareholder.
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AJT
Super Contributor
The market was expecting a 49 USc dividend and only got 46 USc, hence the pullback - still a great company and very well run...
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SimonPB
Valued Contributor
they buy in the open makret at prices set by the board ..
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Not applicable
BHP's market cap is about US$260bn (I think?). So if they are buying back US$10bn of shares, that is a little less than 4% of the total market cap taken out of circulation. So you can expect your investment to be worth 4% more next year. It also equates to about 250m shares, if my calculation is correct. That is about 25% of total JSE volumes of BHP shares traded per year. JSE makes up about 1 quarter of the total market cap, so that is 40m shares from the JSE alone. That is about 6% of all BHP trades on the JSE. Significant, wouldn't you say?
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TOPIX
Regular Contributor
BHP is buying back share because of its inability to invest in income generating companies/projects. I think that's why the market does not react favourably for now - where will future growth come from. Returning capital to shareholders is good, but second best to investing for growth.
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Not applicable
They are investing $80bn in capital expansion projects? they generated $12bn in cash this year? I think they are quite capable of investing in income generating projects!
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Spoegs
Contributor
Yip, Marius is 0 for 3 on identifying and securing a big growth generating acquisition. There was a recent unbundling of one of the big potash players in the States, which I reckon BHP will have their eye on after the failed Canadian Potash bid.
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kwagga
Super Contributor
Results on par with expectations, hence a drop in the share price.
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