Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

BHP Billiton is showing signs of being ground down by U.S. hedge fund Elliott Advisors. The two sides still disagree on how the Anglo-Australian miner should be run -- but if BHP isn't playing Elliott's tune, it is sounding a different note.

In April, Elliott called on BHP to collapse its so-called dual-listed company (DLC) structure, demerge its U.S. petroleum business, and start a massive program of share buybacks. BHP immediately hit back at all three ideas.

Something To Prove
Both BHP share classes have underperformed since Elliott's activist assault on April 10
Source: Bloomberg

When BHP boss Andrew Mackenzie appeared before investors on Tuesday, he was certainly sounding a lot more positive about share buybacks. The miner's capital model provided the flexibility to repurchase stock when times were good. Exploration decisions would always benchmarked against the returns available from … share buybacks.

Meanwhile, Mackenzie sounded less wedded to the shale assets in its U.S. petroleum operation. He conceded BHP had paid too much to acquire them. What's more, if there was a natural owner that saw more value in them, he would be more than happy to talk about a deal.

BHP will maintain that it's always thought like this, but it's hard to avoid the impression that Elliott's assault is having an impact.

The logic of BHP staying in oil and gas is hard to see, as my colleague David Fickling has argued, and Elliott's campaign has flushed out other supporters of a separation of all or part of the business. Elliott has been emboldened to call for a full-blown independent review of the unit's future.

Investors are less keen on the plan to scrap the DLC. BHP is actually made up of two companies -- one listed in London and another in Sydney, each with different assets. The Australian company pays dividends to the U.K. counterpart enabling both to pay the same dividends to their respective sets of shareholders.

Elliott has now tweaked its proposed structure to address a flaw that threatened BHP's ability to utilize Australian tax credits. Still, it hasn't convincingly rebutted BHP's objections that the costs of the proposal outweigh the benefits.

As things stand, Elliott is a long way from getting all it wants. It might get something, though. Mackenzie thinks BHP can grow its value by 50 percent through cost-cutting, productivity gains and clever technology. His path doesn't include separating out the petroleum business. But if there are any potential buyers who accept his invitation to chat, Mackenzie would be wise to get an auction going.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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