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