SU shares continue to be under distributionSU shares will continue to remain under distribution until every ESG influenced investor has sold.
When the distribution started, institutions held about 900mm shares. ENB saw a 50% turnover of shares due to the change in market sentiment as ESG influenced instituional holders bailed. ENB also saw the percentage of its overall institutional ownership drop by about 10% during its distribution phase.
Just for fun, lets play with some numbers.
I expect that SU will suffer a significantly greater percentage of selling from its institutional holders than ENB experienced as SU is seen as the ultimate dirty oil offender by environmentalists. On the other hand, ENB is merely a a pipeline conduit that has been at the forefront of ESG compliance for years.
Lets increase the expected institutional selling percentage to 75% (as opposed ot 50% for ENB) for SU which equates to .75 x 900mm = 675mm shares of distribution.
Let's also assume that the overall institutional holdings drop by 15% (as opposed to 10% for ENB) which equates to .15 x 900mm = 135mm shares during the distribution phase.
Even with SU expected to pick up 76mm shares this year via its NCIB, that still leaves a shortfall of about 60mm shares (135mm -75mm = 60mm).
Who will pick up the extra 60mm shares?
Will the share price get knocked down to a point where non-instititutional shareholders pick up the balance? If so, has the 25% price drop finally reached a point of equilibrium where we may be seeing a bottom? The price dropped like a falling knife from $31 to $25 and has been slowly grinding lower since then.
Or, will SU continue its NCIB into the new year to pick up the remaining 60mm shares?
It appears that ENB bit the bullet and accomodated the transition which limited the distribution phase to about 9 months. SU seems to be intent on grabbing as much of the transition distribution as it can for itself, which is likely to lengthen the process.
Please note that I'm just guessing at the net 15% drop in net institutional ownership and the 75% turnover numbers, so this is just a fun exercise. My point is that the distribution is real, and a tar sands producer like SU is likely to get hit harder than a pipeline company.