So what is Elliott Up To?In the Q1 report about 25% of FCF came from refining and retail operations. If my numbers from a previous post prove to be accurate then almost half of SU's assets are tied up in these two areas. So from Elliot's perspective these assets should be sold since the return from these assets is low compared to the upstream assets.
While I am not sure that using the sale of the downstream assets to reduce debt is the best use of the money (but that is a topic for another day), Elliott has no interest in using the sale if the downstream assets for that purpose. They are not long term investors. They see an opportunity and want to get and out as quickly as possible and make a few bucks.
They would push for the proceeds if the sale to be used as a special dividend to goose up the SP for a short term pop and then get out. Seen this strategy dozens of times over the past 50 odd years. If SU got what I predicted in an earlier post for the downstream assets then Elliott could see as much as $20 special dividend.
Don't know what they paid for their shares but in terms of simple math, based on FCF contribution, the SP of SU would drop by 25% without the downstream to around 30 and plus the special dividend of 20 would give them a combined exit return of 50 a share in a very short period of time.
This is game they are playing, plain and simple.
As I mentioned in an earlier post, for long term investors this strategy is shortsighted and if existing FCF was used better to maximize future growth of earnings, the SP would be a lot higher over time.