A Commodities Firm That Can Weather the Storms

Mark Taylor: Hi, I'm Mark Taylor. I'm going to be talking about why I think BHP Billiton (BHP) is such an attractive investment proposition.

The company is the largest global diversified miner. It has some of the best assets on the planet--many are effectively irreplaceable. It has some of the lowest costs and most readily expendable assets. It has a very diversified asset portfolio--effectively, iron ore, petroleum, and coal. This gives it strength of earnings through cyclical ups and downs in any one commodity line.

One of the beauties of BHP in this latest China-driven investment boom is that it didn’t go overboard investing in growth capital. So, it has managed to maintain a fairly conservative balance sheet. It isn't now in a position where any one commodity is too important to it--where, if that commodity does badly, it's going to suffer.

It has passed its peak capital expenditure programs, so cash flows can be expected to grow, dividends can be expected to improve, returns of capital to shareholders can be expected in future. It's a company that we just think is able to weather the storms of ups and downs in commodities, and that's a very attractive thing.