Suncor Energy Inc. T.SU

The recent $1.9 billion SU short sale mystery

[Obscure1]

I 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.

[Experienced]

Good post...a few thoughts 1...I don't think that the increased short position is a result of options traders hedging their trades as a cursory look doesn't yield the necessary opening positions in the options chain (perhaps Migraine has the details/specifics as to whether I am right about this or not).  If I am right about this then it would appear that some people have made a clear

[MigraineCall]

Sorry, I can't add much to this. However, looking at the chart, there were two tops during this 2 week period, with a bottom in the middle, comparable to where we are now.  Unless these short postitions were initiated at either of these 2 tops, they are mostly underwater or breaking even now.  I do not think many expected such a good earnings report as what actually had came out

[meritmat]

Define Sunset industry? Oil consumption is growing and will for the next decade at a minimum.  It will take decades for alternative energy to replace oil and gas.  Heck even coal use is increasing. After seeing what's happened in Europe it looks to me that gas and oil have lots left in the tank 

[vr6loco]

Sorry,have to agree with Meritmat. First off, I've been driving a Tesla for over 5 years, love it but wouldn't advocate everyone go out and buy a electric vehicle. It should depend largely where you live. Looking at California, the UK and Germany, they have some of the highest electricity rates in the world, if you're to take away the crazy subsidies it's totally dumb idea. When

[pooltec]

My Neighbourhood was built in the late 60"s with electric furnaces.  All gas now.  If Heating your home with electric is such a good idea why are we using NG.  Why are EV's such a good thing.

[Hightowntrader]

Just pointing out that you sold all your Suncor before October 5th and it wasn't close to $48 yet -it was actually lower than it is today. That means that you sold at less than today and missed out on divies too.  (Was it you that told your son to sell it all at high 30's or low 40's?, I don't rememeber) Dunno and don't care, but lets leave the fishing stories on the dock

[meritmat]

I agree with Everthing you said other then the Fishing story part))

[Obscure1]

According to my TD account, my average sale across 30,000 shares was $44.28 per share.  Before that, I was often trading SU shares back and forth while maintaining a core position as I find trading around a core position is often very effective.  My best guess without checking is that I probably averaged a $2 to $3 win per share for each of several round trips on the flips. 

[MigraineCall]

I think that is just fine. You and both sons did well on their trades. The hardest thing for me is to have the discipline to sell or trim positions once it takes a run up, knowing that it will likely be a lot higher in the future. I played that trade wrong many times, and had to pay a higher price a little while later to get back on the train. So, they made a great profit. Good for them! As I