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Linn Energy, LLC Message Board

  • jfredrogo jfredrogo Mar 10, 2013 8:29 PM Flag

    why is line so undervalued?

    Any sensible reasons why this stock cannot get out of it's own way? There always seems to be sellers just waiting any slight increase in price.

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    • I just bought in. Viewing this as a long-term holding to receive dividends. So I don't really care that much about its short-term movements.

      Sentiment: Strong Buy

    • I just finished my tax returns and I paid zero taxes on my LINE distributions.. Can't say that about LNCO.

    • There is a significant discount of LINE to the corporate format which is fundamentally the same value.

      This does suggest that LINE is selling at a discount as the LNCO has a broader market of investors. Also more institutional and fund money.

      Most on the analysts do have recommendations which put line in as undervalued.

      If management can show a stable DCF coverage ration around 1.2 that should put individual investors in a comfort zone and get the partnership units up. All the acquisitions while accretive but provide no solid base line to measure operational progress.

      So I think the catalysts for an upside move will be solid contribution oil contribution from Granite Wash and BRY. Move DCF and put future bear raids off by maintaining a solid coverage ratio.

      The real pay off in line is long term with natural gas prices going up to at least the marginal cost of production and eventually some relationship to world prices. It will happen but how long it takes depends on how passively aggressive Progressives remain to natural gas production.

      Hey the distribution rate is 8% with the promised increase from the BRY acquisition. Enough in and of it self.

      • 1 Reply to norrishappy
      • Tell us, Oh Guru, what should LINE be priced at if and when they stabilize DCF?

        For your edification, here are the last three years' DCF ratios:
        2010: 1.23x
        2011: 2.24x
        2012: 1.14x

        The estimate for 2013 (proforma Berry): 1.13x

        Given your astute prognostication that DCF needs to be at least 1.20x, are you telling us the Linn will not increase in price throughout 2013 even if they are able to achieve their proposed goals?

    • Yes, it's George Bush's fault. Because Obama keeps blaming him for everything, its has be his fault.

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