On Dec. 1, Rick George announced he would step down as CEO of Suncor Energy next May, 20 years after he took the then perpetually money-losing experimental offshoot of Pennsylvania-based Sun Company public. The Colorado-born executive, who would become a Canadian citizen in 1996, had been on the job just a year back then. The stock debuted at US$4.75, giving it a market cap of around US$400 million.
Today, of course, Suncor is one of Canada’s largest and most valuable companies, with a market cap of around $48 billion. Calgary-based investment firm Peters & Co. crunched the numbers: if you invested $1,000 in Suncor in 1992, you’d have $36,870 today, factoring in stock splits and reinvestment of dividends. The gain would be even greater if you were a U.S. investor using U.S. dollars, because the loonie has appreciated since 1992.
As a value creator for shareholders, George has Warren Buffett and his Berkshire Hathaway beat, in other words. The achievement offers some other things for today’s investors to think about. For example, the power of compounding: George’s Suncor achieved an average annual return of 20.3%—which over 19 years added up to 3,587%.
Note too that Suncor’s shares are down by about 25% year-to-date, so George’s record would be still more spectacular if he’d quit a year ago. That is to say, building wealth has its peaks and valleys; what counts is the long-term trend of value creation.
Finally, Suncor’s growth was not like some penny stock shooting to $5. It was hard slogging building real sales and earnings. For almost half that period, a barrel of crude cost in the teens, and George was still able to turn a profit from a supposedly high-cost resource, which gave him and investors the confidence to raise money to build for the future. He didn’t know oil would cost eight or nine times as much. But he did know the things he could control, like capital and operating costs, and he pressed on.
Investors with a time horizon longer than five years would do well to take the same approach to today’s topsy-turvy markets.