SU, Suncor update (#12)

su sept 2012su s sept 2012

This is a special edition for my friends (I hope) at an investment club that I occasionally attend. There are now about 12 entries for this stock, some bullish some bearish. Overall you would have made a lot of money following the advise but I know that most people do not preferring to listen to fundamental bla-bla-bla. The question now is what to do if a merger, read take-over was to occur given the various options offered. The stock in question is ETP, Energy Transfer Partners, shown below.

etp sept 2012

ETP is a 10.7 bln. dollar company, SU at 51.8 bln. is roughly 5 times the size. The stocks behave in roughly the same way, even with similar numerical values so there is no reason to expect one to convey value to the other with the exception of synergies of scale etc. etc. From the perspective of owners of SU the impact should be marginal and accordingly the single most important consideration is where is this stock going on it’s own! That is down after this c leg is complete, approximately to $38, that is if there is a c leg. The ultimate target is at $17 or below, when you have $2 to the upside, perhaps as a result of the noise created by this take-over, and $20 to the downside the answer is quite simple that you do not need to evaluate all the little differences in the options, you need to sell now. One of the cardinal mistakes that investors make is that they focus on trivialities and lose sight of the big picture.