" I’m adopting the mindset of the generalist institutional investor who has largely been left out of this year’s massive energy rally.
With just under three months left to recapture lost performance, combined with daily headlines of energy crises and multi-year highs of oil and natural gas prices, the general investors’ potential new entry could lead to an even stronger finish to the year.
But what will they most likely buy? A small cap stock that has gone up 400 per cent, or a large cap stock that has lagged others, offers better trading liquidity and ease of position entry, and whose poorer performance offers a perceived margin of safety?"
"Suncor, while not a name that I would traditionally own, stands in the pole position of potential recipient of generalist funds flow in my opinion. Poor recent execution at its core oilsand projects has led to substantial underperformance this year (35 per cent increase year-to-date versus 65 per cent for WTI) and the bar of expectations feels so low that any glimmer of hope that it has regained its operational stride could allow for a catch-up trade. Given that it is trading by my estimate at a 19 per cent free cashflow yield and a 2x multiple discount to its U.S. peers at US$70, it offers attractive potential upside into the end of the year."