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Linn Energy, LLC Message Board

  • ronharv ronharv Oct 18, 2012 9:49 PM Flag

    LINE and LNCO: Their PPS Relationship

    Seems to me that there should be a relatively consistent relationship between the two. At least after those who bought LNCO at $36.50 are finished selling for a quick profit. Same goes for the altruistic underwriters who bought the extra allocation at a 6% discount to the offering price. When those sellers ar washed out (and I'm guessing that shouldn't take long), what then? Or is the expected 2% to 5% lower distribution, plus the unknowns of the corporate taxes come 2015, already discounted, making the price relationship between the two pretty much what it is now? To wit: 2 1/2 to 2 3/4 discount of LNCO to LINE? But perhaps LNCO's advantages to a select group of buyers will narrow the gap. (I think it's a given that a significant portion of LNCO's potential price gain is dependent on LINE pulling it along.)

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    • A couple weeks from now LNCO volume will settle down to as the IPO shares are cleared out. Too soon to tell what the differential will be, but likely will vary as the KMP/KMR prices do, inexplicably.

      • 1 Reply to rlp2451
      • Anything is possible due to the economic uncertainty Obama policy uncertainty unleashes on business and therefore out companies/markets.

        But I think it very unlikely LINE/LNCO would trade at a very large discount like the KMP/KMR opportunity. KMR splits to reflect a real increasing interest of cash flow retained by the business.

        LNCO pays cash in hand and already offers a yield slightly above the units. We will see and while I do not expected I would certainly welcome market efficiency which is the same as alpha returns.

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