Post by
Marner16 on Feb 04, 2021 1:28pm
Topped up today
I have been picking up chunks of SU for the past month or so on the dips.
I bought my final tranche this morning so I now have a full core position in SU.
I never own more than 3 core positions. I often pick up 1 or 2 smaller positions in companies that I think represent decent value and present trading opportunities, but they are never long term hold core positions fo me.
I know that my investing strategy is unusual. The mantra among investment advisors is to own a diversified portfolio.
A diversified portfolio strategy makes sense for portfolio managers as they know that an individual can't possibly stay on top of 30 holdings. It is their job to convince investors to work with them because they can provide coverage since they are professionals.
Portoflio managers typically only know the broad brush strokes about individual stocks that any investor can glean from reading the news. Their job is to attract funds and to understand their client's goals. They are not analysts. They obtain their buy and sell recommendatons from analysts.
The guys you see on BNN typically don't have any more idea about a company like SU than investors that follows the news. If an investor reads the financial reports and management discussions of a company, I can almost guarantee that he/she knows more almost any portfolio manager.
I can tell you from personal experience that it is next to impossible to closely follow more than 10 stocks, even when you are a professional working at it full time .
In fact, analysts typically follow an even smaller number of stocks closely and other stocks with less attention. For example, a financial analyst may focus on the major banks or the insurance companies, but not both. A pipeline analyst may focus on TRP and ENB and less so on the PPL's and IPL's of the world, or the other way around. An E&P analyst may focus on SU and CNQ and less so on some of the smaller names.
Personally, I don't see any point in diversifying within an industry. I don't see the point of buying 5 oil stocks or 5 pipeline stocks or 5 banks when I can pick the best of each industry and focus all of my attention on that company.
The obvious objection from fund managerst to focusing narrowly on a small number of stocks is that you could be wrong or a disaster scenario could come up. I can't disagree with that. However, if you are following a small number of stocks closely, you will know when it is time to bail and when it is time to buy.
For example, a significant fire disrupted operations at SU's base plant in Ft. McMurray on the night of Friday August 14th, 2020. Investors that were paying attention could have got out of their positions on the following Monday with virtually no ill effects as the share price closed at $22.45, down only $0.12 on the day. Those same investors could have bought back for as little as $15 as things got back to normal.
The oil analyst from Credit Suisse made headlines yesterday talking about SU being at an inflection point. He mentioned that SU has had a terrible year but they have pretty much cleaned everything up. Management has told us that they have cleaned things up and their financials are going to sparkle in 2021.
A portfolio manager might read the headlines and say that SU seems like it could be turning things around but the street is walking away from the oil patch as part of the green wave. Both statements are generalities that are true. Fund managers rarely outperform the market because they don't know the details. There are times to get in and times to get out and you won't get that from a fund manager that doesn't know about the fire, or the specific details found in management discussions.
I don't have a crystal ball. I don't know how the SU share price will do this week or this month. However, I do know that the SU is getting back in position to be a $40 stock again in the next year or two if not sooner because of the details that are available if you choose to spend the time.
Comment by
NPCexe on Feb 04, 2021 1:35pm
I sold my house, and so all the equity is in the market. I was thinking I didn't want to miss the suncor boat lately, but of course the market crushed it back to low 20s.