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Linn Energy, LLC (LINE) Message Board

  • lizahuang54321 lizahuang54321 Jun 17, 2013 8:29 PM Flag

    missing June distribution

    OK, this has already been discussed.
    Yes, the total payments received in the calendar year is the same as if they had stuck to quarterly.
    But it's also true that the monthly distributions skipped June and so got pushed back by a month.
    As of the old mid August and mid November quarterly payment dates, unitholders will have received one less monthly payment amount than they would have under the old system.
    The whole sequence of payouts has been pushed back by a month, so in effect we do miss a month. If you sell at any point in the future you will have received one less distribution than you would have under the old system.

    Compare to VNR who switched to monthly payments before LINE. VNR started the monthly payments in the month following the last quarterly payout. So no distribution was missed and unitholders did get the equivalent of 13 months payouts in the transition year. Compared to the way VNR did it, yes, LINE holders are missing one monthly payment.

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    • You're all forgetting the yield curve is inverted.

    • Liza,

      WADR, this seems like a completely specious point.

      It's true that from about August 15 to September 15 or so you are 1 month behind under the new schedule as compared to the old. But from July 15 to August 15 you're 1 month ahead. And from September 15 to October 15 you're all even again.

      In sum, the quarterly distribution is being divided into three, and - as compared to the old schedule - you get one third earlier, one third at the same time, and one third later.

      I don't see why this should be an issue, or why the time period that you're behind is of greater significance than the time that you're ahead.

      Sentiment: Hold

    • Liz, I think you're arguing an esoteric point. LINE paid two quarters' worth and will pay six months in 2013, a full payout. So, on a calendar year basis, there's no loss. But MLP's are always "behind", the distribution meant "for" the prior quarter is paid early in the next.

      It is however true, as you point out, that in 2012 VNR paid an "extra" distribution. Of course, it's not really that they peeled off a 13th month payment out of treasury, it's just that they set a payment date earlier than they . . . "needed to"?? Chalk it up to VNR's conservative management, but it's not something another company has to follow. On an "accrual" basis (if that term means anything to equity distributions), the two companies are doing the same thing.

      • 2 Replies to ruby.thedyke
      • "MLP's are always "behind", the distribution meant "for" the prior quarter is paid early in the next. "

        Isn't there typically something in the prospectus about distributions being paid no later than 45 days after the end of the quarter - something like that. And that's why they always pay in mid Feb/May/Aug/Nov (~45 days after the end of the quarter).

        With this change we don't get the full payment for the quarter until a month later, ie. ~75 days after the end of the quarter.

        And if you sell within the month bounded by the old ex-date and the new one-month-later ex-date then you miss the month altogether.

      • Nevertheless, most people will not hold their position forever. At some point they will sell.
        And at that point under the new system they will have received one less monthly payment than under the old system (due to having to wait till one month later to get what used to be the full quarterly payment). This in the end, you do end up losing a month's payout (unless you hold to infinity).

        In my opinion, VNR did the right thing by unitholders, LINE took advantage of a gray area to effectively save having to pay the equivalent of one month's distribution (to the disadvantage of their unitholders).

    • how can we "miss" something (June distribution) when there never was a June distribution to begin with.

    • please clarify Either we are getting same amount we should for a year (no months really skipped since we were quarterly to begin with) or there was a shortfall which means we were skipped. You cannot have it both ways. Which is it?

      • 1 Reply to rusty_wallace_fans
      • Put it this way...previously we would have our full quarterly distribution paid by Feb/May/Aug/Nov.
        Under the new system, we will not have received the full quarterly distrubution amount until Mar/Jun/Sep/Dec - a month later than before.

        So at any point in time, we are behind one month compared to the old system.
        A person who wants to sell after the distribution in Feb/May/Aug/Nov would miss that payment which is behind for one month.
        Unless you consider an infinite holding period, it really is the same as having missed one monthly payment.

    • Liza, that is incorrect. It's been explained ad nauseum here, and you can go to the website for clarification.

      • 2 Replies to rlp2451
      • sorry rip but you are wrong and lisa is right and I don't care how the website spins it, because in feb you got a distribution for dec, jan and feb so that will give you 12 months of distributions for the year according to website but lisa is right because had it not changed you would have gotten a distribution in aug for june july and aug and they have cut the june distribution out and explained it away. A little accounting trick. but they just reduced you one month. If you don't understand this and others don't then you really shouldn't be investing except with a dart.

      • But it is correct. The entire distribution stream has been pushed back by one month. So at the time of any Feb/May/Aug/Nov distribution under the old system, the unitholders will have received one less monthly amount than they would have under the old system. With the whole stream being pushed back a month, anyone who sells on those old Feb/May/Aug/Nov dates would have received one fewer monthly amount than under the old system. They 'missed' a payment.

        I had emailed IR earlier in the day and just got tthe response I expected. Note that they admit that compared to the old system, one monthly amount is received earlier and one later. That backs up my position that the total amounts have been shifted back by one month meaning that if you sell then you 'miss' one monthly amount. Compare to VNR who started the first monthly payment in the month immediately following the last quarterly. You can deny that compared to the way VNR did it, LINE holders have missed a month.

        Here is the IR response:

        Good afternoon, . At your convenience, pls give me a call at the number below. I’m not sure I agree with your statement below.

        I’ve attached an distribution / dividend schedule for the remainder of the year. Note that the first column represents the period for the distribution. For example, April, May, and June represent the Q2 dividend which is subsequently paid in during July, August, and September, respectively. If you look at last year during our quarterly dividend, you would have been paid the full $0.725 in August. With the monthly distribution payout, you’re receiving 1/3 of the payment one month early (i.e. July) and 1/3 of the payment one month late (i.e. September). Net / net, this is equivalent to the previous quarterly schedule. You can double-check this b/c going straight off the date payable, your dividends received (i.e. “paid”) during 2013 is the same with both the monthly and quarterly system.

        Feel free to call me below.

        Hays Mabry

    • Has anyone emailed IR about it and what was their response?
      I assume they will point out that calendar year payments are equivalent which is true but misses the point, imo.
      Depending on the timing of the sale of your units in future you may end up with one fewer monthly payment than you would have under the old system.

      • 4 Replies to lizahuang54321
      • I talked to IR yesterday about it and other topics. The real problem is hedgeye so focus your "eyes" on that bashing crooks and get off this distribution kick you are on unless you are with hedgeye trying to run interference for their nonsense.

      • You do not seem to be able to understand the consequences: In the old regime you received in the mid of next quater what was due for the quater before. So if:

        a) you sell now before the old ex-date, you wil receive more, because you will receive 1 monthly payment e.g. the July whereas you woud have received nothing beforehand. Same yield until Aug 15th.
        b) on Aug 15th you would have received the quaterly. Now you are paid another monthly. So yes by that point in time you are one monthly behind.
        c) But if you sell on Sep 16th you will have received three monthlys.

        So you are right that for the full amount to be received you have to wait until later in the following quater, but you are receiving something, that you would not have received under the old regime earlier now. So technically - one monthly earlier one later - you are exactly equal to the old regime.

      • Talked to IR today about it. If you do the math, you are getting same amount for the year as if you were still quarterly. Why would you have the lame brain idea that you should get 13 month's payments in 2013 (if they started monthly in June instead of July) and then when they go to 12 months in 2014, you would be the first to say they "cut" the distribution at that time. Quit bashing and get a life.

      • Lisa...I'm surprised you stat associated with this pos

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