First of all, I am long BBEP, have owned for awhile and just bought more today. There is an article on the LINE board about Ken Kaiser. A must read for all MLP holders. Not saying the guy is right...at all. Would like to hear any comments positive or negative.
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, upstream MLP BreitBurn Energy Partners (NASDAQ: BBEP ) has earned a respected four-star ranking.
First of all, Kaiser is an economist, not an accountant. They're not the same thing. He has no specific credentials that qualify him to talk in detail about the E&P business, or about MLPs, or non-GAAP methods, etc.
People who *do* have the proper credentials have gone over Linn Energy's books exhaustively -- both as part of Linn's annual audit, and as part of the preparation for the deal with BRY. These folks are all quite content with the way Linn is accounting for its derivative transactions.
Kaiser has an agenda: He's associated with a hedge fund that makes its money by causing wild swings in the prices of publicly-traded securities. He is not a disinterested bystander by any means.
A long time ago, Barron's was worth reading. Now, it's just the financial version of the "National Enquirer" -- publishing anything that will enhance sales. Sadly, the financial press has become more of an echo chamber than a source of information, so once the Kaiser story showed up, everyone else felt compelled to repeat it.
The SEC inquiry (and it is only an *inquiry* at this point) is probably just a CYA maneuver so that they can't be accused of negligence. It's unfortunate that they decided to start all this just ahead of a long weekend, but whether there's anything fishy going on between Kaiser and the SEC -- who knows? (Never attribute to conspiracy that which can be as easily explained by bureaucratic sloth and incompetence.)
And then the ambulance-chasing attorneys show up, trying to throw a shareholder class action suit together.
All in all, a perfect storm for Linn's shares. The fact that BBEP tanked along with them (in spite of the differences in their accounting, hedging) shows that there's a lot of panic selling by people who didn't really understand what they were buying.
All the above is just my opinion, of course.
I should mention that I'm long both BBEP and LINE, and I intend to remain so. I bought into these two companies' *BUSINESS*, not their share price.
Saw it, digested it and all the stuff that went back and forth between Barron's, Cooperman, and this 25yo green pea from Princeton who thinks he knows the business better than everybody else in the sector.
It's very fishy. I don't know about 18000 contracts, but I found a story about a 4800 contract bet that cost $750k that was worth zero a couple weeks ago, that is now worth $6M thanks to the Barron's articles that got the SEC sniffing around at LINE. That kind of money could easily be a corrupting force.
At best, the timing (on both ends) is a big coincidence. At worst, this guy is a dirty rapacious capitalist.