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Linn Co, LLC Message Board

  • bluedreamdreamer bluedreamdreamer Nov 27, 2013 5:24 PM Flag

    pairs trade

    the price difference LNCO-LINE hit 0.88 today, lowest its been in a long time. sold some LINE to buy LNCO, if price gap approaches parity I'll swith entirely into LNCO and wait for LNCO to outperform, given its more attractive structure for soome investors

    I wonder- given the different structures of LINE and LNCO, there may be greater tax selling pressure on LNCO versus LINE? Could that be one reason for the recent outperformance of LINE?

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    • I have been doing the same thing.

    • I have held KMR for years, it is a LLC like LNCO. KMP unitholders swear by KMP; KMR shareholders swear by KMR. KMP issues K-1's at tax time and KMR issues nothing. KMR is simpler re taxes.
      KMP prices at a premium to KMR, or KMR is discounted to KMP depending on your view. That spread has widened and narrowed many, many times over the years. Discussion about it is evergoing with no conclusive reason or rationale.
      I suppose it boils down to the Vanilla or Chocolate argument.
      I realize LNCO sends 1099 's for taxable accounts but shareholders are aware of that at buy so I doubt that weighs heavy on the spread. The discount caused by the difference equates to a slightly higher yield.
      Therefore an inducement.


      Sentiment: Buy

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