Structured products proved to be financial engineering squared, and I was told more than once I didn't "get it" when explanations of why subprime mortgages could be rated "AAA" through the magic of financial alchemy were met by my dumb-eyed stare.

But if your objective is to enhance shareholder value then all possibilities, financial or otherwise, should be considered. Jacques Rousseau of Soleil/Back Bay Research correctly has been cautious on the refinery stocks as fundamentals are challenging. Nevertheless, he has a "buy" recommendation on Sunoco (SUN - commentary - Trade Now). He believes there is significant value in the company and that a "sum of the parts" analysis equals $48 a share. He expects management to unlock the value of the company in 2010 through asset sales and spinoffs.

Sunoco's new management team has had a busy 2009. It has, among other things, closed a polypropylene plant in Texas, announced a $300 million business improvement initiative, acquired an ethanol manufacturing plant in New York, cut the dividend in half to preserve capital, and changed its pension plan to cut costs.

The company is considering whether to sell its chemical division and a decision should be made soon. What Rousseau thinks Sunoco should do, and what I call financial engineering (in the best sense of the words), would be to spin off its coke segment into a master limited partnership, similar to what it did for the logistics business. Refining assets are valued by the market at four to six times enterprise value/earnings before interest, taxes, depreciation and amortization, and MLP-type assets are trading at eight to 12 times EV/EBITDA. The shareholders would be the beneficiary of such a mark-up. Using a discounted cash flow calculation, Rousseau arrives at a price target of $38, with the sum of the parts possibility a bit higher.