barron's is just a mouth piece for short hedge funds that see individual investors as prey. All they need to do is is scare them out of their positions.
The hedge issue and the capital spending (with too little growth in output to show for it) are one in the same. Linn expanded its hedging out several years in the past few qrts. Linn accounts for these hedges as capital. When oil or gas is sold, the cost of these hedges is recognized along with the benefit of owning them. Does that sound right to you? GAP says it's right. Wells says it's right. Raymond James says it's right. Barron's says hedges are expenses to be taken years before the benefit is realized and that their value disappears until it pops out of nowhere as above market price years later. That would make Linn temporarily worthless followed by a crazy windfall -just what hedge funds want!
Barron's is just allowing the hedge funds to rewrite Linn's books for wild swings to scare out investors looking for steady income growth.
Linn's output didn't increase as much as capital spending because Linn spent big expanding its hedge book out several years -and it has paid to do so! Linn has a higher valuation because of this output price certainty. Smart hedging of output is why Linn is bankable and able to buy E&P assets cheap from companies that can't afford to develop them due to low commodity prices.
1.Lower production due to weather 2.hogshooter disappointment -move to OK 25% interest rather than 60% in Texas 3.Jonah ethane rejection all year possibly 4.Permian basin problem with production take away( should alleviate soon with new pipes etc) 5. With Berry project 1.07 coverage ratio 6.No near term reason to buy while price falls 7.Quiestions about sustainability of upstream capital intensive model -BBEP results bad also Q1 but VNR ok.I have several clients and myself in nearly 50,000 units and we are holding.This too shall pass -back to 38 by august at the latest.Barron's analysis is superficial and wrong in ways already pointed out by Linn and other sellside analyst.
I agree Barron's article is very misleading but it appears to be coordinated with the upcoming secondary offering announcement to bring down the stock price. I believe the time to buy or add will be after the secondary announcement. It will be a great opportunity in my opinion and I believe some big money is circling overhead waiting to pounce, especially after stop loss orders are triggered.
Why would there be a secondary? They have no need for cash and the price is depressed. Linn has never done a secondary with a depressed price and no secondary has ever been at a lower price than past offerings.