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Option1307 (29.92)

What To Do With Sunoco (SUN)...?

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April 30, 2012 – Comments (4) | RELATED TICKERS: SUN

Today was a big day for SUN shareholders (woo wee!) after Energy Transfer Partner's (ETP) announced a buyout. The deal essentially values SUN at ~$50 a share which is where it closed today. So that begs the question, what to do with the shares?

I haven't looked into ETP all that much, just briefly after the deal was announced today, so I can't precisely comment on their prospects. However my initial reaction is no thanks:

1) They are an MLP which is great if you're looking for dividends but not what my initial goal of SUN was related to. I believed in refiners when they were getting smacked down by the biggest/baddest ugly stick you've ever seen and my thesis was always that they'd pay off handsomely, not that I'd be colelcting dividends.

2) Heavily invested in natural gas. I'm a big believer in NG long term, but not necessarily sold on the short term fundamentals etc. and don't really see any reason for it to bounce prior to winter 2012 which is a long long ways away.

3) Crack spreads have improved from their 2009ish lows, so my original thesis is not as strong

4) MLP's have some annoying paperwork, ok not really a true negative but annoying nontheless.

There are a few positives to mention:

1) ~7.5% dividend is not too shaby, especially in this environment (thanks Fed!)

2) Essentially a play on oil/gas, which last I checked isn't going anywhere anytime soon

 

I need to do some more looking into ETP and the details of the deal before I make my final decision but as I mentioned above, at first glance I think I'm selling out of SUN. That would be the last of my refiners, they've been a good ride (bumpy at times) but well worth the short term pain.

 

Thoughts? Anyone considering otherwise?

4 Comments – Post Your Own

#1) On April 30, 2012 at 11:11 PM, Option1307 (29.92) wrote:

(Edit button please)

I forgot to add this to the list of positives

3) There is some talk that SUN could be part of a bidding war which would obviously be good for the share price. Although, I hear this thrown out there a lot when companies are in the process of being taken over etc. Not sure how much weight I'd actually put into this idea or if it justifies holding onto SUN. Seems more like hoping and wishing vs. a smart rational decision.

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#2) On April 30, 2012 at 11:32 PM, awallejr (81.20) wrote:

Well unless another suitor comes forth you are kind of tapped out on the upside, maybe you might squeeze a little more through a hostile takeover.

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#3) On May 01, 2012 at 10:48 AM, Schmacko (58.06) wrote:

If I owned SUN shares I'd sell now.

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#4) On May 03, 2012 at 8:59 PM, Option1307 (29.92) wrote:

Sold out today at $50.00, yes!

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