A U.S. activist investor has set its sights on Calgary-based Parkland Corp., urging the fuel retailer to consider selling or spinning off its Burnaby refinery.

New York-based Engine Capital LP., which owns about a two per cent stake in Parkland, sent a letter to the company's board on Wednesday. In the letter, Engine criticized Parkland for being "unable to translate its advantaged strategic position and quality assets into adequate returns for shareholders," and said the company could achieve better performance by becoming a pure play fuel and convenience retailer and getting rid of non-core assets.

"We are particularly troubled by Parkland’s staggering underperformance compared to Canadian convenience retailer champion, Alimentation Couche-Tard," Engine managing partner Arnaud Ajdler and partner Brad Favreau wrote, adding the investment fund proposes Parkland sell or spin off its Burnaby, B.C. refinery as well as its heating oil and propane distribution businesses.

"We aware of several parties interested in these different assets," they wrote.

Parkland purchased the Burnaby refinery — which refines 55,000 barrels per day of crude and synthetic oil into gasoline, diesel, jet fuels and more — from Chevron Canada for $1.5 billion in 2017.

On the retail side, Parkland is one of the fastest growing independent fuel suppliers and marketers in North America, with a network of retail service stations across Canada, the northern U.S., and the Caribbean. 

Its On the Run convenience store brand is expected to have more than 1,000 locations by 2024.

Engine is also calling for a refresh of Parkland's board. The activist investor criticized the company for the length of time some board members — including chair Jim Pantelidis — have served, as well as its approach to executive compensation. 

Engine, which is requesting a meeting with the board, said in its letter that if the board is unwilling to consider its proposals it should consider a sale of the entire company to either private equity or "strategic buyers."

On its website, Engine Capital says it launched in 2013 and often engages with management teams and boards of directors to create value for the benefit of all shareholders.

"We are looking for undervalued companies where we understand the reason for the mispricing and where change is occurring to close this value gap," the investment fund states.

In a note to clients Wednesday, RBC Capital Markets analyst Luke Davis said he believes that in general, Parkland's major shareholders are aligned with the company's current strategy and "tend to be passive, though the key concerns outlined have been points of contention for select investors and could gain some traction."

Engine said in its letter to the board that it believes Parkland's stock could be worth around $45 per share, a 55 per cent premium to its recent price. 

Parkland shares were up close to nine per cent as of mid-day Wednesday, at $31.82.