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Suncor Energy activist investor: SU stock price jumps as shareholder Elliott demanding safety review

By Rob Griffin

Edited by Georgy Istigechev

17:53, 16 November 2022

Logo of the Suncor Energy at the Suncor Edmonton Refinery in Sherwood Park
Suncor Energy stock has gained 47.90% year-to-date – Photo: Artur Widak / NurPhoto via Getty Images

Suncor Energy’s (SU) stock price has soared 21% since its executives struck an agreement in the summer with shareholder Elliott Investment Management.

The activist investor, which owns approximately 3.4% of the Canadian company, had made a list of demands, including an overhaul of the safety culture.

The success of talks has pushed up the Suncor Energy stock price from $30.62 in mid-July to around $37 on 16 November 2022.

SU has gained 47.90% year-to-date (YTD).

Suncor Energy (SU) Live Stock Price Chart

Here we look at what the Suncor Energy activist investor was calling for, and the impact that can be made by activist investors, as well as how this may affect the Suncor Energy stock value.

What is Suncor Energy?

Suncor, which was founded in 1979, is one of Canada’s largest integrated energy companies. It operates in its home country, the United States, and the North Sea.

Its upstream portfolio includes bitumen, synthetic crude, and conventional crude, which helps to offset high-cost oil sands production.

This is supported by its refining operations, which have a capacity of 466,000 barrels a day, according to Morningstar.

Suncor became a publicly traded company on 18 March 1992, with an initial share price equivalent to $2.38 (accounting for subsequent share splits).

Suncor’s common shares, trading under the ticker symbol SU, are listed on both the Toronto (TSX) and the New York (NYSE) stock exchanges.

The all-time high stock price of $50.34 was reached on 20 May 2008. The average Suncor Energy stock price for the last 52 weeks was $31.67, according to data from MacroTrends.

Suncor Energy 5Y Stock Price Chart

Suncor Energy activist investor: What happened?

Elliot Investment Management, the Suncor Energy activist investor, manages around $51.5bn of assets. Its affiliate hedge fund, Elliott Associates, L.P., was founded in 1977.

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In a letter to Suncor dated 28 April 2022, the investment management firm claimed the company had “seen a decline in the exceptional performance” that was formerly its hallmark.

It also outlined a series of demands, including the addition of new independent directors and a review of both the management and its operations.

The letter was the latest example of how activist investors have been making their presence felt in boardrooms around the world.

Despite the challenging investing environment, such activity remains elevated according to investment house Lazard’s H2 2022 review of shareholder activism.

The study found Q2 2022 was the second most active quarter in the past five quarters – and behind only a record-setting Q1 2022.

Agreement reached

On 18 July 2022, Suncor announced it had entered into an agreement with the activist investor and would appoint three new independent directors to its board.

It also agreed to form a new committee to oversee a strategic review of Its downstream retail business.

“These actions build on Suncor’s ongoing efforts to enhance safety, reliability and operational excellence and to restore Suncor’s industry leadership,” it stated.

In response, Elliott Partner John Pike and portfolio manager Mike Tomkins said they appreciated the “collaborative dialogue” they’d had with Suncor’s board. Pike and Tomkins added:

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“As a significant investor we look forward to continuing to work constructively with Suncor as it takes important steps to achieve best-in-class safety, improve operations and restore its industry leadership.”

Suncor Energy stock: Analyst commentary and forecasts

Suncor is a ‘moderate buy’ based on the views of eight Wall Street analysts compiled by TipRanks, with four seeing it as a ‘buy’ and four a ‘hold’.

The consensus view was that the Suncor Energy stock price could rise 9.02% to $40.36, up from its $37.02 level at the market close on 15 November 2022. The highest forecast was $45.06 and the lowest was $33.04.

According to the algorithmic forecasts of WalletInvestor, the Suncor Energy stock price could fall 4% to $35.55 over the coming year.

The bottom line

While a firm's shareholder makeup and news of activist investor influence may provide valuable insight into a company's performance, it should not be used in place of your own research. Always do your own due diligence before trading or investing, looking at the latest news, a wide range of analyst commentary, and technical and fundamental analysis on the stock.

Keep in mind that past performance does not guarantee future returns. And never trade or invest more that you cannot afford to lose.

FAQs
 

Is Suncor Energy a public company?

Yes. It became a publicly traded company on 18 March 1992 with an initial share price equivalent to $2.38 (accounting for subsequent share splits).

Who owns Suncor Energy?

54.37% of Suncor Energy's shares are owned by institutional shareholders, while the remaining 45.63% is owned by retail investors, according to WallStreetZen.

The Royal Bank Of Canada is the firm’s largest individual shareholder, owning 68.62 million shares representing 4.76% of the company.

Is Suncor Energy a good stock to buy?

Whether you think Suncor Energy is a good stock to buy depends on your personal circumstances, such as risk tolerance and investing goals.

Remember that past performance does not guarantee future returns. Always do your own research. And never invest more than you can afford to lose

Markets in this article

SU
Suncor Energy
38.59 USD
-0.3 -0.770%

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The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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