RE:RE:SU is really just a big penny stock Bigbear7405 wrote: That does not explain Cnq rise to glory. Some people left during the sell out. Have they come back? Not entirely. I
f the profits and the debt repayment continue it will pull investors to this stock. How can it not? Obscure1 wrote: The SU retail investor doesn't stand a chance. OIl has backed off a bit, but is still up almost 4% and yet SU is down almost 1%.
SU traded 23.5mm shares at the close earlier this week. The buyers and sellers of those type of transactions (my guess is the transaction was options related) are in complete control of the SU share price.
There is absolutely nothing that retail shareholders can do or say to affect the share price in any way. As such, retail investors can make the right call and yet end up with egg on their faces because the share price has virtually nothing to do with the company. It gets even worse because it doens't even matter what the company does.
SU might as well be a penny stock.
It is not surprising that the pros continue to sell SU from their funds regardless of how the company performs. Fund managers want to own securities that they understand and can explain to their investors. SU doesn't meet that criteria.
The answer to your question is actually quite simple.
Suppose you have, to pick a round number, 100K to invest in energy stocks. So you look at all your choices to pick the one that you believe will provide you with the best return.
As part of your decision, you think energy prices will go up for the foreseable future and you also want a company that will be increaaing tis production of energy over time. You also look at the financial statements to see which company has the best cashflow metric and debt position etc.
Your analysis leads you to a choice between SU and CNQ. Both have amazing free cashflow, are buying back stock and paying down debt so they are about equal in this regard. In terms of your assumption about energy prices going up you see that a significant proportion of SU's cashflow comes from PetroCanada which doesn't increase with energy prices. Conversely, CNQ is essentially totally levered to energy prices and so it will have better numbers in a rising energy scenario than SU. In terms of production, SU has no plans to increase production in a meaningful way whereas CNQ has signalled a willingness to buy more production capacity with its cashflow.
After doing this analysis, you conclude that while SU has great cashflow, based on your assumption, CNQ is a better pick and you buy it instead of SU.
This is the message that the market is sending to SU shareholders.
I am not pumping CNQ vs SU - in fact right now I don't own either. All I'm saying that instead of whinning and bleating about the under performance of SU compared to other energy companies and claiming market manipulation, take a deep breath and look at the situation with rational cool head.