RE:RE:RE:Case study #1 - MTY Food Group Inc.I have had a decent sized position in Suncor since the same time frame as Peyto.
Similar logic used to establish SU position, deeply undervalued, relatively low cost producer, tons of cash flow likely in future, share buybacks, etc. , lots to like.
Plenty of negatives as well, namely base mine extension approval, big deal few people mention. I will be keeping a close eye on ESG requirements negotiated next couple years or so, lots of cash flow will be siphoned off to appease regulators.
At this point in Suncor's existence, I worry more about politicians exploiting climate concerns than inept board members. Yes there is value to be unlocked, but Suncor is not the type of business I buy for growth. I bought Suncor for being under valued, having long life reserves, and likelihood of great cash flow in the future as well. Reserve life that would become more valuable over time. Think zero number of dry holes drilled as the world realizes oil will be used for decades :-)
Now that the rocket scientists at Elliot has spotted the obvious, I am forced into short term thinking again. Should I sell the news, buy the rumour, etc.
Darn, now I have to worry about my assets appreciating faster than planned!
First world problems :-)
Seriously though, I prefer steady buybacks (@ discount to intrinsic) with increasing dividends as opposed to spinning off retail facing portions of the business. Remember the old story about the old bull and the young bull? The young bull runs down to get at one of the cows, the old bull walks down and gets ALL the cows! That is how I see Suncor management, mopping up under valued shares because the business is not really the type that can grow. I am not saying Suncor management is brilliant, far from it, but Elliot and crew are short term thinkers, one and done, etc. I have not reviewed thier proposals in detail yet, but my instincts tell me the resultant Suncor will be weaker than the Suncor I own today.
I will try to keep an open mind though.
As usual, Elliot's research department failed to ask me for my opinion :-)
Cheers,
Nukester