Fri, Mar 6, 2015, 11:52 PM EST - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Linn Energy, LLC (LINE) Message Board

  • norrishappy norrishappy Feb 16, 2013 9:44 AM Flag

    This is pretty funny too

    It appears from Linn's financial statements that the company bought a considerable amount of in-the-money put options on natural gas last year. These are more expensive than at-the-money puts. Specifically, Linn bought a lot of puts struck at $5 per Mcf from 2013 through 2017 at a time when the "strip" (the average price for that five-year period) was in the $4 to $4.50 range. The puts would have had an intrinsic value of 50 cents or more. Gas now trades around $3.15 per Mcf, after averaging $3 in 2012, making the puts more valuable still.

    The increase in hedge prices is exactly why other primarily gas EPs are trading down on lower natural gas prices. ;-)! LIne's effective sales have not changed. So LINE out performs as price decline and under performs on the way up.

    This is so bad I am not going to renew my Barrons.

    "Anonymous short sellers are improperly mixing the definitions of cash flow and non-cash flow metrics (Net Income vs. Cash Flow)."

    This is true.

    "Linn reported a net loss of $430 million in the third quarter, for instance. But it determined that distributable cash flow totalled $202 million. The discrepancy was caused primarily by $520 million of unrealized losses in its derivatives book, which occurred in a quarter when energy prices rose."

    Wall Street pros would not fall for this. But rumors of manipulating the price of puts could. But in this case paying an extra $0.50 is a use of cash, as it is intrinsic value. Something a company with cash flow problems would not do.

 
LINE
11.86-0.13(-1.08%)Mar 6 4:00 PMEST

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.