Post by
Marner16 on Feb 22, 2021 10:10am
Long memories
The share price for SU is difficult to comprehend unless you understand how the street works.
SU is has always been a staple of the investment funds in Canada. Fund managers get paid ridiculously high fees to make money for their clients, not to lose money.
When the market crashed, the hue and cry went out across the land to hold on and you will win in the end. If SU hadn't slashed their dividend, they would have simply lumped into the "bad market" pile with everyone else. However, when SU cut its dividend while CNQ held their dividend, the market penalized SU more than its peers.
The fund managers would have taken the SU dividend cut as a stab in the back as it made the fund managers look bad. When you get paid to look smart and suddenly you look dumb, bad things happen as in clients start thinking about whether they should be paying high fees to someone that doesn't look so smart.
Fund managers can handle bad markets. The say the market is not their fault and you should always be in the market because you win in the long run. What fund managers can't handle is looking stupid. Those that sold look even more stupid as the price starts to recover.
SU is now in a position to fly. They slashed expenses thereby cutting their costs/boe. They have everything running at or near or even above capacit. They 2nd rail line has increased their capacity. They wrote off almost $500mm in a joint investment with CNQ that CNQ didn't write off. With WTI at $60, SU is going to make bucket loads of money in 2021.
Despite all of the above, fund managers continue to shun SU because they have big egos and long memories. Instead of manning up and doing what they are paid richly to do, which is to provide superior returns, the fund managers are hiding behind the "oil is bad" mantra.
Investors, as opposed to traders, look at the current situation as an opportunity to establish a core position in a grossly undervalued equity.
Comment by
Grandcentral on Feb 22, 2021 3:25pm
Totally agree. Hedge funds are in the game too, so big money is made on both sides. Now that they drove it down, the big money will drive it right back up.