$4.4bn blown is equivalent to 87cps which could otherwise have been returned to shareholders. Add all the other $500m here-$1bn there, misallocations of capital and you soon get to a meaningful shareholder return flushed away. As you yourself say, it amounts to tens of billions of waste.
But it doesn't stop there. It impacts the perception that the market has of the company's capital discipline and stewardship of shareholder funds which, in turn, informs that valuation multiple that investors are happy to apply to the stock over time. Just a single point multiple alters the valuation of the company multiples of times more than just the $4.4bn relating to this particular misadventure.
"It’ll continue to do well simply because it has the biggest and best assets globally."
Agree. It has a privileged legacy asset position, but ironically that has been part of BHP's problem because it has created a cultural complacency on the part of management and made the organisation fat and lazy.
(I've been speaking to people within WHC, who have just acquired BHP's coking coal assets; they tell me stories of waste and lack of attention to cost control, and people on massive salaries swanning around doing nothing.)
"A must own in any portfolio."
Disagree. Not if they continue to fritter away the rivers of cash, that flow from their legacy assets, on ideological virtue signaling.
The market is the ultimate arbiter of company performance, and BHP has underperformed the market on just all relevant investment time frames:
6-Months:
BHP: -7%
All Ords: +6% Variance: -13%
1-Year:
BHP: -5%
All Ords: +9% Variance: -14%
3-Year:
BHP: -5%
All Ords: +7% Variance: -12%
5-Year:
BHP: +20%
All Ords: +25% Variance: -5%
(And remember, BHP is a big component of the All-Ordinaries Index, so if one was to exclude BHP from the Index, the true underperformance of the stock is even more pronounced than those figures above indicate.)
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BHP Price at posting:
$43.67 Sentiment: None Disclosure: Not Held
(20min delay)