The AFR reports this morning that investment bank Morgan Stanley has reignited the debate on BHP’s capital management policies saying that the Big Australian, “could afford to return $US10 billion to shareholders over the next two years.”
It follows on from recent comments by investment powerhouse Blackrock fund manager Evy Hambro, who previously told the AFR that BHP should embark on a share buyback program.
“Buybacks reward the investors and shareholders who stay on the register for the long term . . . Special dividends don’t really result in anything long term.”
It’s all about the growing pile of cash that BHP has on its balance sheet and while talk of a buyback will no doubt help the share price, they’re also often a signal of a diminishing pool of acceptable or available investment choices for the company undertaking. So it’s a double-edged sword.
Yesterday BHP closed at $37.61 but the market is likely to take it higher today.
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