Elliott’s increased stake in BHP could herald bid for board seat

ACTIVIST hedge fund Elliott Management has fuelled speculation it may bid for a board seat at BHP Billiton by revealing it has raised its stake in the mining giant.

The New York-based fund now owns 5pc of BHP’S London stock in cash, up from an initial 4.1pc stake it took earlier this year. The move means Elliott has the right to call a meeting of BHP Billiton plc, the Uk-domiciled half of the business, which accounts for 42pc of the register.

Elliott also owns 0.5pc of BHP Billiton Ltd in Australia through financial instruments called contracts for differ- ence. The fund launched a campaign against BHP management in April, claiming its shares had underperformed its rivals and demanding changes to its strategy.

BHP, the world’s largest miner by revenue, makes most of its money by digging up iron ore, used in steel. One of Elliott’s key goals is the unification of BHP’S London and Sydney shares into one listing, which it believes will allow it to return more cash to shareholders. Elliott said that as a result of its campaign BHP had “taken steps toward a smarter, more value-generative way of conducting business”.

It backed Ken Mackenzie, the incoming chairman, who starts in September, to heed its calls to shake up the business, including demands to spin off its costly US oil arm.

The fund said the election of a new chairman was “an opportunity for action” and added that its “increased shareholding leaves us well placed to monitor BHP’S progress and hold it accountable for delivering results”. Elliott is known for its aggressive campaigns against company boards and it has sought to win over sceptical Australian retail investors in BHP with a billboard campaign and a website.

BHP reports its full-year results on Aug 22, one day before nominations to the board close.

The company’s London closed up 1.94pc at £13.68.

Separately, hedge fund manager Crispin Odey sounded a warning on the strength of demand for metals in China, the world’s largest consumer of steel and copper. “China’s economy in a year’s time will be much weaker than it is now,” Mr Odey told Bloomberg.

♦ Elliott Advisors has shelved its legal battle against Dulux maker Akzo Nobel after its bid to oust the company’s chairman was last week rejected by a Dutch court. After months of pushing for the removal of Akzo chairman Antony Burgmans, Elliott has now said it will put all litigation on hold for at least three months. shares