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Linn Energy, LLC (LINE) Message Board

  • zackra360 zackra360 Jul 26, 2010 2:55 PM Flag

    distribution increase

    today vnr announced a distribution increase , this is there second increase in less than a year, line is much better hedged with less debt, so keep fingers crossed . zack

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    • jackhiller@ymail.com jackhiller Jul 27, 2010 4:15 PM Flag

      Zackra, Savy post. I saw when researching that they farmed out actual management and operation despite the LLC strcture. From a legal perspective, with a simple majority vote, they can adversely manage for other unit holders while taking advantage of control. Thery note that there is the LLC organizational benefit to all unit holders, but also make clear that the company is not running its own show.

      Yahoo shows 21% insider holdings, but that can be way off because of multiple legal holdings spread among family and asssociates under 5% that could provide voting control.

      That arrangement would make me a nervous street holder--bad sleep instigator.

    • vnr is great but they have like 10 employes , they have there maintenance done by vinland , nambi holds the cards evidently a wealthy individual but it all depends on what he wont's to charge he and vinland are in control , it may all be fine , but then again not

    • I really don't understand why anyone would buy LINE or any similar stock looking for capital gains. A small increase in pps over time is desirable but a good percentage dist. using the companies DRIP program gives an investor a large tax free annual gain. If my numbers were correct an 8% dist. re-invested thru a DRIP gives a 35% or so annual gain. When you do sell you decide how much, over whatever time and manage taxes.PPS appreciation and then selling seems less efficient to me. Comments are welcome.

      • 2 Replies to tlcnev
      • The 8% distribution is annualized, not 8% per quarter. 2%/qtr reinvested gives you ~ 8.25% annualized. If we were getting 8%/qtr, I'd own a LOT more shares.

        PPS also factors in. The DRIP program automatically invests for you at whatever PPS is current. I don't know the exact mechanics. But I do know it might buy for you on a spike, or you might get lucky and get the shares on a dip. Luck 'o' the draw (not that my stock picking is any better). Your DRIP might invest at $30/share only to see the PPS fall to $25. Persoally, I'd rather have control over the money and invest when I feel it's appropriate, in the vehicle I like best at the time.

      • 35% over what period of time?

    • Come on sell us some more and help raise our upcoming dividend back up to 9% annually

    • No , I'M not saying you shouldn't own both , I'M just comparing the two , very similar company's because they seem to follow the same patterns I bought vnr from 7$ 4.80 , in 08 ,09 ,and held it to 15 then roled into line at 20 in aug of last year since then they have held a 5$ price spread , if that is to continue line may wish to increase distribution . and I think they can do it if management thinks there is an advantage in keeping the stock price at the premium it deserves to VNR and companies like VNR

    • jackhiller@ymail.com jackhiller Jul 27, 2010 8:07 AM Flag

      I like the idea of having both for a bit of diversification, but the two companies are really in different leagues now. As the UBS analyst recently pointed out, Linn's growth has given it a size that advantages its financial capabilities to construct deals at lower costs for better acquisitions. Not nit picking, but simply conveying current data.

    • yea , I agree jack , but did you see the top line in Q1 , it was all -most as much as all of last year , these guys are hitting the ball and hitting it hard sooner or latter somethings gotta give, I will not be disappointed if they don't, but I will not be surprised if they do

      • 1 Reply to zackra360
      • When I first bought Lynn Energy stock over a year ago at almost half its present price, I received distributions totaling 13% a year. Since then the stock price appreciation means that those purchasing Line Energy shares will receive 8.41% over the next year. Compared with other LLPs and MLPs the return on investment is still worthwhile.

        Linn Energy purchases resources to replace depletion and to assure stable production volumes over time. The cost of drilling wells figures in here also.

        I am satisfied with my present return from investment and did not anticipate the marked appreciation of the stock price. The hedges were the reason why I invested in the first place.

        Name me another E&P LLP or MLP whose management has secured such a high return while natural gas and oil sell for less than the hedged prices. Management may allow hedges to disappear after 2013 when natural gas and oil prices have risen to present day hedge price valuations or higher. The distribution will be unchanged or could be increased by then.

    • jackhiller@ymail.com jackhiller Jul 26, 2010 3:04 PM Flag

      Zack,

      During the past several months, Linn has purseued a growth phase with purchases, and thre last two for over a $180 Mil are to be funded not by raising new equity, but from operating cash flow and relatively expensive bank borrowings. Therefore, Linn, as a conservatively managed company, is very unlikely to raise the distribution until its new growth levels off with a higher level of cash flow after the $180 mil is paid off.

      So, do not look for a raise, but a plan presented for growth to enable a future raise.

      Best of luck

 
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