RE:RE:The Algo Storm on the US side todayYes, good points. Although this is my largest position, I also have several other horses.
As it seems to struggle more than the others, it is the one that gets all the focus and scrutiiny in an attempt to diagnose what ails it.
I sometimes see it as the struggling child of the family that gets all the attention from the parents, while the other siblings that are doing well enough on their own get none.
Perhaps to your point, the share price may be presently held back by investors not seeing a future plan or vision outside of traditional oil, and a clear path to shift to renewable energy. Instead they see Suncor as simply doing the best at what they do now, which is viewed by many as not doing enough.
In terms of future growth in revenues and profits, it may be already in the cards if oil prices keep rising as the world runs out of easy oil, and the supply demand balance remains tight. They don't even have to produce as much to generate the same profits, even if production declines.
Others that are moving early on into the costly bleeding edges of the subsidized renewable energy sector are struggling to make their businesses financially sustainable going forward. The capital needed for the new solar or wind or the electrical grid to distribute all this green energy from these companies has yet to be invested, while Suncor already has everything already built and in place. The renewable sector is fortunately able to do some of that presently, as it is currently riding a wave of cash from ESG investment hype, just like the funds available in the recent cannibis hype, like the crypto hype, like tech hype, like dot com hype. Lets see just how long that ESG enthusiasm lasts without profits.
I guess I am old school on never allowing myself to own things that exceed reasonable valuations, and let myself get sucked into the hype trends. That has kept me out of all the inevitable crashes of the bubbles down to normal valuations, but I missed a lot of winners. I missed the runs of Facebook, Tesla, Bitcoin, Bre-Ex, but I did get whacked on Nortel.
What appeals to me is that Suncor currently is planning to continue to be boring. They are striving to be as efficient and clean as possible with oil sands production along with the refining and marketing arms, with constant stable consistent growing FCF generation. The end of oil is a very long way off, although I can see it's use as a fuel may wane as it becomes too precious to burn.
I don't want Suncor to be bled dry of cash by it undertaking questionable costly ESG schemes like hydrogen electrolysis solar plants, nuclear fusion, and others in order to make headlines, and I don't think there is a magic bullet out there.
I expect that carbon capture initiatives will be undertaken soon to ensure long term sustainability of the operations, and be a tradeoff for approval of future reserve expansion. Those undertakings and infrastructure will be financially quantified and add to the incremental cost of a bbl, but with the assistance of government tax credits.
Time will tell if management's approach is right or not on this one, but in the meantime we may have to wait and rely on our other horses to pull more of the load.
Experienced wrote: MigraineCall wrote: SO many disgruntled posts here. Well, don't get your panties all a bunch ladies.
If you ran 2 charts today side by side, SU on the NYSE, and SU on the TSX, you would have witnessed every slight rally sold off and smashed by the algos on the US side, on each runup. These drops were not initiated on the Canadian side. Once the price was beat down and the US algo selling stopped, it was the Canadian buyers that stepped in and brought the price up before it was smashed down again. Rinse and repeat till close.
US volume today was massive, twice it's average, at 15m vs 7m.
Canadian volume was good, but not nearly as high, 12m vs 9.5m.
Remember, this algo storm will pass once the US institutional investor(s) finishes picking up his marbles and goes home. Once they exit, the tunes start and the party is back on. Today's close was a gift.
I must admit, seeing this kind of algo action today, reminded me of another time, and I'm a bit worried about my March calls. There is a large total open interest, and a lot are now heavily in the money. The counterparties might want to smash the share price so they don't have to pay out on expiry. Seen that movie before, so I'm watching how it will play out.
Other than that, just relax and hang out for the ride. Remember, WTI hit $93 today, with WCS well over $100CDN. Focus on that, and what those kinds of prices will do to future Suncor cash flows.
Russian oil is having trouble finding buyers, as nobody wants to be caught holding a tanker full of $100m of oil they can't unload due to possible sanctions. Nothing will happen until after the Olympics anyway, so prices should stay elevated.
So please refrain the usual complaints about useless management causing a drop in share price as they didn't raise the dividend or some other fault. Although we are looking at stellar future guidance, reported earnings were indeed a slight miss in Q4 due to some one time operational mishaps, and the closure due to the unfortunate fatality incident of the haul truck operator that fell asleep. That miss may have caused some to sell.
Stocks go up and down, so don't feel the need to find someone to blame. Next you might blame the poor guy riding by on his bicycle that you think should be driving an SUV and burning gasoline instead.
Have a good weekend all.
[/quote Great post as usual.
In terms of your comments on the oil price, I agree that the options market situation could have a bearing on the shorter term price movement. I don't know what the numbers are now, but when I worked in the business many years ago, about 70% of the trades on the NYSE were driven by the pros and market makers on the CBOE who were buying or selling the underlying securtiy to reduce their risk and lock in a profit no matter what happens. A friend of mine who was professional trader on the CBOE likened his job to picking up quarters in front of a steam roller...lol. As we have discussed in posts before we have a somewhat different view of the future of oil prices over the medium and longer term and I will leave it to people to review those posts of they wish and not rehash it again..
What I would like to discuss is the highlighted section from your post. I agree that over the years I have seen a tendency by posters to call for new management if the price performance is lagging. In most cases, this discussion is totally unwarranted as you point out.
That said, if the price performance laggs over a considerable period of time, I take a slightly different perspective which may lead to action on my part. The way I look at it is that the stock market for a particular industry is like a stable with horses in it. People can chose which horse they want to ride for various reasons. If people consistently chose one horse over another there is likely a good reason that they are doing this. In the case of oil sands producers, people are clearly chosing other horses than SU. In this vein, smart investors need to look at this and decide which horse they want to ride or whether they want to ride any horse in that stable at all. I have pointed out numerous times in the past that one of the reasons that people are picking other horse than SU is due to the fact that SU management hasn't presented a concrete plan on how to grow the company whereas the other have effectively communciated that they intend to grow their business. I place this divergence clearly on the head of current managment.
So what does one do about this if you want to stay in this stable?
Instead of complaining about mangement, change horses.