BHP Billiton (BHP) & Off Market Buybacks

Submitted by Craig Strzelecki on 28 March, 2007 - 19:13

Off market buybacks tend to follow a specific trend which offers trading opportunities to a wider audience of investors who may not be able to directly take advantage of the tax benefits. Quant research by Maquarie Research Equities on off market buybacks indicates that in the short term off market buyback stocks generally run up to the tender close date. After tender close, stocks tend to market perform or underperform in the short term, before outperforming in the longer term. This week, BHP Billiton (BHP) announced it had successfully completed its off-market buy-back of 141.1 million shares, completing the first stage of the US$10 billion buy-back programme that was announced on 7 February 2007. The 141.1 million shares bought back represent 2.42% of the issued share capital of the BHP Billiton Group and 4.03% of BHP Billiton Limited. So far the BHP share price has performed in line with the historical trend for a typical off market buyback, and is up approx. 2%.

Besides the BHP Buyback there are a number of other off market buybacks with an approaching tender close offering more short term trading opportunities. These include: Fosters Group (FGL) (announced 20/02/2007, closes 5/04/2007), Alumina (AWC) (announced 5/03/2007, closes 20/04/2007) and Just Group (JST) (announced 7/03/2007, closes 27/04/2007).

In addition to buybacks, the top ranking stocks in the analyst's AlphaLive model this week based on events, are Challenger Financial Services Group (CGF), and Bluescope Steel (BSL). BSL rose in the rankings due to the recent acquisition of the Smorgon's distribution business.