The recent $1.9 billion SU short sale mysteryI agree with Experienced that the $1.9 billion short over a two week period is a mystery.
In the past, I would dig and dig and dig in an attempt to find the reason WHY. Now days, I use a different strategy. I no longer care about WHY and I focus on WHEN. More on that below.
When I was working in the Ivory Towers, I was paid a lot of money to know WHY and so were my peers. It is a pretty exclusive club and sharing information (via the trading desks who talk to their counterparts at other firms each day as normal course business) was part of the job. Secrets don't last long at that level.
When I left the business, I no longer had the inside track on information. Yes, I could make a phone call, but it wasn't the same. The difference in information flow between street professionals versus what retail investors receive is quantum. Competing as a retail investor is virtually impossible so retail investors have to find different strategies or they end up paying the piper.
Regardless, I still tried to figure things out after leaving the industry. Sometimes I was successful in "reading the situation" but not always. Being right can make you a lot of money, but being wrong can get expensive.
These days, I just accept the fact that something like a new $1.9 billion Short position over two weeks is a sign.
Somebody that has more information and a helll of a lot more money than I do has decided that SU shares are probably going lower. And, they have committed a huge amount of money to their conviction. Even if the transaction is an offset to a sophisticated option strategy, the direction is clear.
What do I do with that type of information?
I sold my SU shares a few months ago between $44 and $48 so I'm not doing anything. If the Shorts are successful, I might consider buying some back for a trade when I see evidence of short covering.
Life has shown me that I'm not any smarter than the next guy.
Life has also shown me that there are clues that can be beneficial if you know where to look for them and how to interpret them. To that end, I keep picking away at the scraps.
I don't see myself ever holding SU as a core position again after watching a Tony Seba video on the future of energy. Tony has an impeccable track record of forecasting future trends and the future for energy is not in tar sands.
I think I posted the following Tony Seba video before but for those that haven't seen it, I strongly recommend spending 19 minutes of your life doing so. I had to pause the video a couple of times to make sure I understood everything.
If my attempt to insert the video is unsuccessful, here is the link: https://www.youtube.com/watch?v=fsnkPLkf1ao
As I have mentioned in the past, I don't really have much to add in terms of value when it comes to Suncor. The math is easy, but it seems to me that unknown macro events constantly overwhelm the efforts of the company.
Investing in the coin-flip of never ending bad decisions made by politicians doesn't make a lot of sense to me.
I understand that management has adopted a "tobacco industry" strategy of milking things for as long as possible. It is not a bad strategy as the payouts offered provide outsized returns.
However, SU's handsome payouts and share buy backs will come at a very high cost if oil is indeed a sunset industry. If Tony Seba is once again correct in his vision of the future and timing of the energy transformation, Suncor's hansome payouts may become very expensive over time.