Linn Co (LNCO) is really just a shell company that will make it easier for Linn Energy (LINE) to access a greater number of investors. LINE operates as an MLP. As such you sometimes will have to worry about UBTI -- Unrelated Business Taxable Income. You will have to pay taxes on this even if you own LINE in an IRA. If you do not own LINE in an IRA or other retirement account, you will have to file a form K-1 for LINE distributions. This too is extra tax work. Many people do not want to have to deal with any extra complications, so they choose not to own great stocks like LINE. This includes many institutional investors. LNCO is a way to allow those lazy investors to participate in Linn Energy without having to go to any extra tax trouble. LNCO's just completed IPO sold 30.25 million shares at $36.50 each to raise $1.1B.
You have left out of account the ridiculous premium, recently 4%, that it costs to buy a share of LNCO which reduces total return (dividend plus capital gain). K-1 problems are greatly exaggerated. Tax software like Turbo tax takes care of them easily.
lNCO started trading at 37, is now at its all time high of ~40, 2.5 points above its present 50 day moving average. In that same period of time, LINE started at ~40, hit 42.57 and is 38.45 today, 0.66 above its 50 day moving average. When LINE has gotten stretched above its 50 day MA by ~2.5 points last couple years, its sold off. I'd have to hazard a guess LNCO's recent outperformance of LINE is close to over
BUT LNCO has a much smaller float than LINE so may be more volatile (does look to have somewhat higher option implied volatilities), so could get stretched higher above its moving averages. LNCO has definitely been more actively traded (daily volume/float) than LINE. No K1 to hassle with for traders
I not only hold Linn in my IRA but have held other MLPs in my IRA in the past. I have NEVER had to pay UBIT because of consistent UBTI losses. Over the past few years Linn has produced significant losses that can be carried forward on your annual form 990-T if ever necessary, as long as you're proactive with your broker.
Well, it is interesting to see you are still trying.
"Yes...SOB...you have a great perception of the OBVIOUS....:)"
After the chart,
You might also want to check the average prices for the LINE 2013 hedges for OIL and compare that to today's oil price (use the Dec. 6, 2012 presentation) ...and maybe comment about the percentage of the hedges that are made of PUTS so we can get a better understanding about the added profit even though the oil is hedged at 100% for 2013.
....so please fill us in a bit on how that added profit from oil kicks- in and at what price?