CNBC’s Jim Kramer on Friday advised investors to take shares in Canadian oil producer Suncor Energy, but only if they are confident that oil prices will remain higher.
Kramer’s comments came after activist investment firm Elliott Management, which holds a 3.4 percent stake in Suncor, called on the company to change its management and take other steps to improve its performance.
“I think Suncor’s future is not so much about this activist campaign, but more about where the price of crude oil can go. If you think it will stay high, it could be just a great move, because the oil sands can generate huge profits, “said the Mad Money presenter.
“However, if you believe that oil will soon reach its peak and fall significantly, this stock will be a dog and no matter what changes [Elliot Management] do, “he added.
Shares of Suncor fell 2.58% on Friday, but reached a new 52-week high earlier in the day.
Elliott Management cites “missed production targets, high costs and, tragically, a number of employee deaths and other safety incidents” in its letter.
Suncor responded to Elliott’s letter, saying it would review the investment firm’s recommendations.
“Whether you’re looking at it financially or from a purely human point of view, it’s not a well-run business,” Kramer said of Suncor’s achievements.
However, he said he believes the company has more management options as the price of crude oil rises, which means the company could become highly productive if it takes Elliott’s insistence into account.
Brent crude futures hit $ 109.34 on Friday, while US West Texas Intermediate crude rose $ 104.69.
“I think stocks jumped yesterday because the confident Wall Street Elliott could make the Suncor board unlock value,” Kramer said. Here are some free tips for Suncor executives: Work with these guys.
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