Does the recent rise really surprise investors?
It certainly doesn't surprise me and is why I loaded up on this @$27.00 and $27.40 as much as I could and within reason of my portfolio. I figure this will run up to about $32.50 give or take a few cents with most days being up and some being down. At $32.50 this will still be paying a 9% Divvy. From there we will need to see what the quarter comes out to and what the remaining fiscal year looks like. I believe if the quarter comes out good and the fiscal year looks good going forward, then it will run to about $36.00 (8% Divvy) by the end of the year. Of course a strong outlook, a few upgrades and a slight possibility of an increase in distribution on LINE's behalf could mean even more possibly up to around $42.00.
I always believed this management team and never believed the pundits. Remember LINE was one of the only companies that didn't cut their distributions during the hard economic downturn in 2008/2009. They have a plan, they are sticking with it and thankfully have ignored all of the pundits like a REAL management team would do.
GLTA and the best of the best to the Longs!
Sentiment: Strong Buy
"Does the recent rise really surprise investors?" - not this investor!
pokernstocks • May 23, 2014 3:47 PM Remove
It isn't going to take 12 months. Wait until the rich folks read the WSJ and Barrons and Forbes over the weekend. I expect next week there will be several upgrades. This thing will march right to $30/sh within the next two weeks. This is a very predictable pattern. Sell the news, because the benefits are long term...wait until the traders are done, and then the investors will step in. Bottom line (no pun intended) is that there is no way in hell that a safe 10% dividend will be ignored by wall street
Yeah, I'm surprised it's over $30 in the context of it being in the $27's not long ago, and no visibility yet on distribution growth. I thought the Wolfcamp resolution would move the price up around here for starters, but the first half of the deal disappointed analysts expecting more of a current cash flow kick, and it stalled out. This gradual run upwards has come on no news at all, but sometimes it happens like that.
Was and is the price cheap? Sure, but that doesn't mean the market has to agree. I think from here if Wolfcamp II comes in at least as expected, and Q2 coverage is decent, we can continue to climb as the year plays out, I would say $34 is not out of the question, $36 I kind of doubt, and $42 I would say is impossible anytime soon, even assuming a small distribution increase. But management has already said they need to see sustained 1.1 coverage before they would even think about it, and to me that says 2015.
We've seen some good price action recently, but I still think this is a 2015 story, and there can't be any further mistakes. Even then I'm not sure we can see a 7-8% yield, that level of confidence might take years to rebuild. But if the distribution is in the $3.10 range late in 2015, I could see an 8-8.5% yield, and that would equal $36.50-$38.75 for LINE, maybe a buck south here if trends hold. Not trying to be Daryl Downer, just being realistic.
Mike a .10c divy would equate to about $1.00 additional increase in pps (LNCO). If they can pull of covering the distribution (LINE) @ 1.1 x and increase it a dime then the pps may rise a little higher. I like the old adage that you have to walk before you run, but a few solid quarters, an increase in dividend and a 1.1 x coverage with a normalization to around a 7.0 % dividend, then you would be looking at $40.00 PPS with the $3.00 Divy.
Another point as well while we are on the subject. As they acquire new leases and as the price of Oil and Gas increases the hedging is locked in at a higher price. I am not sure on an existing lease if they are hedging the new production at a higher price, but it would be nice to know and maybe someone can elaborate on this subject.
Sentiment: Strong Buy