John Hempton throws in the towel on his Linn Energy (LINE) short following yesterday's acquisition of Berry Petroleum (BRY). It's a swap of what Hempton believes is near-worthless stock for old, but valuable oil assets. Those assets can generate enough cash to keep what he believes is a Ponzi, rolling for many more years.
Yea but management is not doing any more puts for the foreseeable future. So hard to say what Ponzi scheme he is prattling about now. ;-)
Sad thing is he is probably walking away very rich. Very much doubt he ever intended to hold the position until the call. Mostly taken from individual investors in LINE.
If he threw in the towel on the Berry deal, I hope he lost money. I found it all unsettling but still bought 4.5K at 35.90 (plus sold more puts) and sold today for a very nice profit. Sheer luck, of course. Hempton is really misusing the Ponzi scheme notion, but he knows dramatic hyperbole like that scares investors into bailing. I bet there are more shorts who receive their wedgies next week. Just to be in the game I bought 20 of the March35 calls today at just about intrinsic value. I'm hoping for a shot at 39.50.