Considering the tax cautions in the LinnCo prospectus, I'm baffled about the relationship between the LINE and LNCO prices. Are people simply switching to avoid K-1s and tax deferral? Or are there other explanations? Thoughts?
One explanation might be that at the end of the year there is a lot of cash flowing into retirement accounts, both from individual and institutions, providing more market for LNCO than LINE. I haven't really looked at the number of shares trading though to know if there are more shares of LNCO than units of LINE being exchanged (in relation to their respective floats.)
"One explanation might be that at the end of the year there is a lot of cash flowing into retirement accounts, both from individual and institutions, providing more market for LNCO than LINE."
Anything is possible but this is the most unlikely. LNCO was created to get more institutional money in the game. As the trading in LNCO matures there are more opportunities for the hedge guys to profit from mispricing between the two assets.
Also, LNCO can attract larger money flows from the institutional investors who cannot or do not wish to invest in public partnerships. In theory now that trading liquidity is established LNCO being more liquid and with more institutional participation should usually be the more 'efficiently' priced of the two.
There is also tax selling in MLPs not only for capital gains but also dodging the Obama's increase on ordinary gains in recapture with Obamascare kicker on top of that increase.
Given individuals continue to decrease their stock holdings as a % of houshold assets; even with the gains due to stabilization from the systemic failure of the financial system, it would be unwise to assume individual investors are plowing right back i with anything close to a 1 to 1 ration.
Sorry OLB troopers missed on of the easiest gains ever offered by the market. Selling LINE at 40+ and buying an equivalent asset at a 15%+ discount.
OLB self proclaimed experts all costing any one foolish enough to believe their absurd claims costing folks the opportunity at a common sense no risk trade.
I was about to ask the same question. I have held LINN in IRA for a number of years since I consider it a long term investment and since any sales and purchases within an IRA does not have to be reported to the IRS yearly, had assumed that within the IRA any special tax considerations would not apply. Now I have LNCO in a regular account just this recent year because I can no longer contribute to a regular IRA. What are the complexities? Should I worry about any of this for just 100 shares? Why LNCO better for IRA as per Cramer?) Should I worry about any of this for just 100 shares? Also was wondering why LINN is more volatile than LNCO. Perhaps because much higher percentage held by retail than pros, and large difference in market cap, 7.55B vs 1.32. Thought I would compare other stats but most are shown as NA, apparently due to the nature of the company (or what ever it is considered)(cash is shown as $1000).