Getting our email cherry popped by Elliott Management's Michael "McDreamy" O'Looney this week got us to thinking once again about the New York hedge fund's attack on BHP. What's in it for them, other than great publicity to get more billions pouring in its funds.
To our eye, it seems there's less and less in it for Elliott. Far from the initial gain they would have made as their activism pushes up the BHP share price, we hear Elliott might now be sitting on a bit of a loser. Not that they have much skin in the game to lose.
Elliott claims to own 4.1 per cent of BHP's UK-based shares. Their public filings confirm they might actually speak for only 0.23 per cent of the UK shares, which equates to the grand total of 0.08 per cent of the whole company.
But Elliott's real exposure may never be known. We've heard from a couple of banks that the Elliott holding is all wrapped up in a basket of complicated commodity/equity swaps that act as a hedge. All a little too mathsie for us, but even we can work out that what such a hedge could mean is that Elliott really has no skin at all in the game. Perhaps McDreamy, or even better his delightful news anchor wife Annika Pergament (who McDreamy tells us is a big fan of our work), could help us out with the detail on this. No need for secrets, right?
One fact we did notice in Bloomberg's reporting of the quarterly update from Elliott boss Paul Singer last week was that the Elliott Associates fund "while it made money in bets on distressed securities during the quarter, the fund lost on commodities and portfolio protection related to interest rates, equities and credit".
So, if we're right and Elliott isn't making money directly out of the BHP agitation, we're doing Mr Singer a great service with this public service announcement suggesting the only real benefit of the whole exercise is as a giant PR show to keep the money rolling into his funds. No, really, the pleasure is all ours.
