Rebecca Teltscher Parkland Fuel Corp PKI-T Unspecified Jun 10, 2024

A big shareholder is agitating for change, wanting management to enhance value. World-class assets. It's cheap.  Refining margins have been coming in and general malaise in economy may explain share price. Very undervalued and value will be realized somehow. Debt, but a lot of FCF. Yield is 3.96%.

The controlling shareholder wants to sell the gas stations and keep the refineries where the margins are higher and sit on lots of real estate. He doesn't own the shares, but the bonds which pay 6% during falling interest rates. Not investment-grade bonds, so the leverage is high.

Bowing to pressure, the CEO has stepped down, adding to uncertainty. The company also lowered guidance, which is not overly surprising, really, considering the economic situation unfolding. The CEO change should appease Simpson and other funds somewhat, but likely only a bit. There is still a strategic review ongoing. Certainly a sale is one possibility. There are a lot of moving parts here. The stock has held up well, likely due to speculation on its future. We would not see it as a great purchase right now, as it would essentially be a 'bet' on a takeover in a very uncertain market, and not really our type of play. 
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Not doing as well as ATD on gas stations and growth, so there was pressure to change things up. PKI's credit rating is BB, while Sunoco's is BB High; so if you own, you should probably sell, rather than waiting to see what happens down the road. If deal fails, stock price will fall into low $30s.

Well run for a while, but lost its way. Offer on the table isn't the greatest, as it will be a taxable event. Stock's picked up lately. Doesn't believe there will be a competing offer because it's such a mixed-up company. Appeals only to Sunoco. Tender and move on. Look at ATD instead.

He thinks the takeover offer goes through so it has a $44 price target. Therefore it is not a long term investment.

It's been underwhelming. You get a little dividend and a little growth. Over time, neither is exciting. Meh.

For now, we would HOLD but we think it may have reduced upside in the mid-term as the companies integrate. Depending on the reaction to the stock this week and in the next few weeks, we can see it as a source of cash for other ideas as they emerge.
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There's a lot happening with this one. The deal isn't actually that amazing, as you'd expect a higher takeout price for a company this size with those assets. Stock's pricing in a chance that the deal does not go through, because a proxy battle is still ongoing. The story's not over.

(All the picks today were from October, when he thought we were late cycle. His view is that we've started a new cycle, so tech and consumer discretionary risk-on names should do better.)

Still likes it, but probably more of a market perform for the next year. Then should really come into the spotlight in 2027. Hang on, pick up the dividend, don't add more.