LONDON/SYDNEY (Reuters) - Two weeks after Elliott Management’s surprise assault on BHP Billiton, the fund manager’s three-point demand for change is gaining little traction with investors, prompting expectations a second strike is imminent.

FILE PHOTO: A promotional sign adorns a stage at a BHP Billiton function in Sydney, Australia, August 20, 2013. REUTERS/David Gray/File Photo

While Elliott is struggling to push through a $46 billion overhaul of the Anglo-Australian miner, investors said it could point to BHP’s plans for further sales of marginal assets and increasing shareholder returns as, potentially, some incremental victories.

“I think the case for agitating for management to do what a shareholder wants is always there,” said Neil Boyd-Clark, portfolio manager at Arnhem Investment Management, a long-time holder of BHP’s Australian shares.

“In a way, this might be presented as being this great scary exercise, but there is a win-win-win for everyone involved.”

Over the past year, Elliott has built up a minority stake in BHP and earlier this month told the company it had failed to deliver “optimal” value.

It demanded BHP spin off U.S. oil assets, ditch a corporate structure built on dual listings in London and Sydney and hand back more money to shareholders.

In a swift rebuff, BHP said the costs of the changes would outweigh the benefits.

BEEN THERE, DONE THAT

Investors have been skeptical. Since the announcement, BHP’s London shares have fallen nearly 6 percent against a 0.8 percent drop on the FTSE 100. At Wednesday’s close, BHP’s Australian shares had dropped 2 percent against a 0.9 percent rise in the broader market.

“The fact that the share price did nothing indicates to me that the probability the market puts on them succeeding is essentially zero,” said a top-10 investor in the London shares.

Mining companies have come under intense pressure from shareholders since the end of the commodity boom in 2012, which left many investors nursing the painful after-effects of rash spending and costly acquisitions.

The downturn means many of Elliott’s ideas had already been tested within BHP, said major investors questioned by Reuters, none of whom said they had been contacted by Elliott.

BHP’s reliance on commodities also limits how much value could be unlocked from the sort of financial engineering proposed by Elliott, they said.

But a BHP statement on Wednesday showed room for movement, investors and analysts said.

In a break from a usually dry production statement, BHP Chief Executive Andrew Mackenzie said the miner had already been “fundamentally restructured” to increase returns with the demerger of South32 in 2015, the removal of layers of management and change in its approach to capital management.

The group also announced it would put its Fayetteville shale gas assets in the United States back on the market.

BHP has said there is no connection between these measures and Elliott’s demands.

Mackenzie is due to provide an update on strategy at a mining industry conference in Barcelona next month.

NEXT STEPS

Investors said one target for a second strike by Elliott could be BHP’s next major executive appointment - a new chairman. Incumbent Jac Nasser has said he will not seek re-election at this year’s annual general meeting.

“Who is going to take over replacing Jac Nasser is obviously going to be the key thing for investors this year,” said Andy Forster, portfolio manager at Argo Investments, a shareholder in BHP’s Australian arm.

Still, a source familiar with the situation said Elliott had not offered views on the board or management team in eight months of private talks with BHP before it went public.

Since its April 12 demands, Elliott has not made any statements about BHP although it promised further details in due course. An Elliott spokesman declined to comment.

On April 10, Elliott said it held about 4 percent of the London-listed shares, short of the 5 percent needed to call a shareholders’ meeting.