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Linn Energy, LLC (LINE) Message Board

  • gnuhhp gnuhhp Jul 12, 2013 3:17 PM Flag

    Should i buy LINE?

    I bought HLF but missed GMCR.

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    • It depends on the SEC's informal inquiry findings. If the SEC announces the inquiry has ended and the BRY deal is approved, LINE/LNCO will pop right up. However, if the informal inquiry becomes a formal inquiry...look out below.

    • Nothing is sure as clearly Progressive linked Hedge Funds have been very successful in spreading irrationality as fear.

      But in the long run LINE should be able to maintain this level of distribution. Natural gas prices should increase to at least the marginal cost of production. Further improvements in drilling technology are not an issue as LINE holds long cost assets. Even improvements reducing the cost of drilling should be a benefit.

      As part of a diversified portfolio? Yep. Even the shorts admit the distribution can be sustained for years. Pretty weird but clearly the expected coverage is such that the shorts worried about being made to look very silly in short order if they did not say it. At $17 that distribution is something close to 20% or greater than trusts.

      Given this is all purposefully irrational trading where the unit price many move is not known.

    • nobleonetoo@att.net nobleonetoo Jul 12, 2013 3:35 PM Flag

      I purchased LINE yesterday - and already down $1.20! Still pleased I am 'in' regardless

      Sentiment: Hold

      • 3 Replies to nobleonetoo
      • "already down $1.20, but still pleased".
        Hmm.. I am pleased too. You are a standup guy. We need more of you!

      • For Linn to cover their distribution they need to increase their DCF by 18%. I do not think they can do that without BRY. They say they can grow production organically by 10% in 2013. Even if that were to happen and to to flow through to a 10% increase in DCF, that is far from 18%. So without BRY, the distribution gets cut, but I would say that a distribution cut is already more than priced in. I would guess that without BRY Linn ends up $25 to $27.

        If the BRY merger goes through, Linn says it increases the DCF by 40 cents in the first year, presumably backloaded, but averaging an additional ten cents a quarter. That gets you to 74 cents a quarter and presumably more, as they think the merger will allow synergies that cut costs. So with the merger you probably get a price of $30 to $35.

        I do not need growth and I do not think MLPs are meant to grow, but to provide income. So if you are okay with no growth and a better than 10% yield based on current prices, and future share prices likely of $25 to $27, I would buy it even without the merger.

        If you think the merger will happen, I think it is a buy. I am not worried about the SEC. My only concern is panicked BRY share holders who are looking at the price of oil this week and dreaming of better offers.
        Ruellia

      • ... and I consolidated most of my holdings in LINE a week ago - and boy am I glad I cut my losses. Personally, I have no confidence they can turn this ship around in the near future. I feel they have grown too fast ... and now they got the cancer. As I wrote earlier, when they came up with the idea piggy-backing an LLC (LNCO) on top of a MLP, they messed up big time.
        Good luck with your purchase ... I see this bouncing cat at $19 by August ...

 
LINE
32.14-0.39(-1.20%)Jul 10 4:00 PMEDT

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