SunTrust's "Value Initiative" Falls Short

Banking, finance, and taxes

Published: May 15, 2007 9:15 am

Last Updated: March 26, 2020 11:34 am

Usually when companies issue favorable "shareholder value initiatives" you tend to see value created in the shares almost instantly. That isn’t the case for SunTrust Banks (STI-NYSE) today.

The company says it will focus on efficiency and productivity, the sale of its Coca-Cola (KO-NYSE) common stock holdings, and work on its capital optimization and balance sheet management. Just last week, we noted in our free email newsletter (sign-up on homepage) that call options trading activity was signaling something brewing and there was talk going around again that the company may be up for grabs. Rumors in the past had noted SunTrust as a likely acquirer, so who knows.

It aims to save some $530 million in fiscal 2009, up from original saqvings targets of $325 million. It has also boosted savings plans in 2007 and 2008. It sold 4.5 million Coke-KO shares, about 9% of its holdings.

Unfortunately none of the "value initiatives" noted today hint at anything toward a sale. When the new initiatives don’t look like a buyout and that is what the street was hoping for, you can see the reaction in the stock speaks for itself. SunTrust shares are actually down about 0.5% and have been down as much as 1% in early trading.

Jon C. Ogg
May 15, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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