What again Mr. Bary ! Barron’s, Twilight of a Stock-Market Darling, May 4, 2013
Barron’s, Twilight of a Stock-Market Darling, May 4, 2013
What again Mr. Bary!
Mr. Bary does not give up. He was distrustful of LINN’s accounting mention in his February 18, 2013 article with information first highlighted three years ago by Wells Fargo Securities with an accounting method utilized by most MLP’s. Investors’, contrary to Mr. Bary comments, realize LINN is an energy producer structured as an MLP.
Mr. Barry’s emphasis on daily period production differences are pointless. As to capital expenditures, long term investments are just that, they are capitalized and often paid for by borrowing or equity issuances which Mr., Bary fails to mention. In addition, long-term derivatives likewise are capital items that companies, not hedge funds typically capitalize and report at maturity or the closing of the position.
Also Mr. Bary emphasis on longs-shorts doing battle is not supported by the fact that the short interest in LINN is only app. 4 % of the shares outstanding. As to referring to Hedgeye’s comments, upon a search they are a monthly subscription service selling advice.
And contrary to Mr. Bary’s evaluation of LINN, what is wrong with valuing a consistent dividend paying company on its dividend level? Kinder Morgan, KMP, a major successful MLP sells for 2.8 X NAV a forward PE of 30 times.
Tennisjoel, Greenwich, Ct.
Drilling into the Numbers, Barron’s
By Andrew Bary
February 18, 2013
Mr. Bary so-called discovery about Linn Energy, LLC accounting practices capitalizing derivate contracts and the innuendo that the company is misleading investors is far from timely and is incorrect. The accounting policy was highlighted three years ago by Wells Fargo Securities (report attached).MOST MLP utilize this accounting practice which is a more accurate presentation when stating non- GAAP cash flow. Mr. Bary fails to point out the industry wide use of this method and the fairness of the presentation for shareholders.
Mr. Bary also fails to mention L
It is interest LINE is short around 4% and LNCO 20.5%. All that additional short selling should have narrowed the discount and clear inefficiency. The most logical possibility is that institutional money going on sound research values LNCO with the census opinions of a large body of analysts.
While all this short shake down is working on retail investors. Game theory rather than efficiency or constant human nature with anti-social zero sum games
How the heck a very successful hedging program which secured cash flows so additional investments at very inexpensive long term borrowing - in an epic natural gas market disruption - became corrupt management is really wild.