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Linn Energy, LLC Message Board

  • elainejonesbonham Aug 4, 2013 7:09 PM Flag

    Stop loss limit

    I just finished paying off my student loans and recently bought 500 shares of LINE at $27.60 Not knowing what to expect from Thursday's earnings / conference call I want to place a stop loss limit at $25.60 because $1,000 is the most I am prepared to lose. I’m new at investing. Is this the correct way to approach stop loss limits – first determine the maximum loss I can handle and then set the limit? Thanks

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    • The earnings report is a potential make-or-break event. I purchased the August 28 puts. I bought more shares today at 26.42 and bought the puts for 2.30. My risk is .72/share plus commission till next Friday.

    • I am a long term investor of line, and I think you picked the wrong first stock to buy, that said the drop in line's pps has made it very attractive to own and collect the distributions and option premiums at this time I think every law office has announced law suits against line and the officers how long that will take to resolve it self and IF the merger with berry completes then I thin we can see some up side back in line' PPS

    • Better to just hedge. Maybe sell the Oct. $25 @ $2.8. That would be about break even for you. If It goes lower than $25 your basis will be closer to $25.5. You'll still the the dividend till then. Maybe keep the $2.8. It's a real simple thing to do. Talk to your broker.

    • First congrats
      second don't use a stop loss that is what panic investors use. Show some patients and not the nervous sparrow syndrome. My first buy was on WebTV by Microsoft and it was a stock that was at .96 and was bought out down the road for 55.00. I bought it several times adding to my position because the CEO whom took it over was known as a turn around specialist in the oil market. Bernard Isautier was him name a French man
      just do more studing of your investment
      and remember everyone here has won and lost. Know one is perfect.

    • If you're new at investing, you really should have gone into a few of the better-rated funds per Morningstar after spending some time reading about your fund options. In the meantime, Linn's earnings will be no good because the hedges will be way down in current market value. And even though that doesn't matter with Linn because they're not in the business of trading puts and swaps (the hedges stabilize income from future production), there'll be bloggers and reporters who don't grasp this and will produce inaccurate headlines about bad earnings (a temporary loss on paper only) when the significant metric with MLPs/LLCs (Linn is an LLC) is cash flow. Linn Energy is neither a stock nor a corporation, although many misguided reporters try to treat it as if it were. Still, the current low price may reflect the anticipated info., so you could still emerge without getting nailed.

      Re stop losses: I prefer the invisible trade triggers that TD Ameritrade provides as opposed to the ones that pro traders can see. The trading houses can (and do) finagle the price to take shares away from investors for their own quick profits. Fairness is not exactly their watchword.

    • First, congrats on paying off your student loans. It is always good to get out from under debt.

      Second, congrats on wisely choosing to invest.

      Your generation won't likely have social security, nor pensions so your future comforts are likely going to be determined on how much and how well you invest over the next few decades.

      Finally, it is difficult to answer your question. None of us are you. We don't know what your pain threshold is for loss. To me it seems like a good starting point, but I think it might be a bit tight. I think Linn could test this lower limit of yours, especially if the quarterly earnings are bad (i.e. less than 1.0x coverage ratio, no real answer on SEC or Berry merger).

      All of that being said, just remember, the advice you get on these message boards is FREE and worth just what you paid for it.

      My advise is this: Do you know why you invested in Linn? Do you realize what an MLP/LLC (pass thru entity) is and the K-1 paperwork that will be associated with it? Do you understand Linn's business model? Do you follow the E&P sector and any other E&P companies?

      I think Linn is at a tipping point. If they land Berry, things will be fine for quite a few years. They can squeeze Berry's oil properties for all the cash they can get out of them, and use it to shore up the holes in their DCF. Without Berry, Linn will need to be EXTREMELY disciplined with their capital investments and acquisitions in order to maintain a 1.0x coverage ratio. They are struggling right now. In fact, you can appreciate how much they are struggling by fact that they managed a .88x coverage last Q and this was AFTER they made $2+ billion in acquisitions in mid 2012 that Norris was just hyping about being so great and accretive. Can you imagine how bad it would have been without those 2 deals?

      I think you will do fine though in the long run even if you hold. The assets have value.

      • 3 Replies to rrb1981
      • elainejonesbonham Aug 5, 2013 11:17 AM Flag

        Thanks to all for the advice. It was important to pay off my student loans as I want to do right thing and because I am grateful for receiving the loan in the first place.

        My thinking with Linn was that they were undervalued and had the assets to pay a high dividend for some time. While the accounting is mostly arcane (to me) I relied on the assessments of the auditing companies going through Linn's books in relation to the BRY merger. Hedgeye aside, if those accounting firms did not have a problem with Linn's hedging strategy well, then that was good enough for me. Also a man I respect from a business standpoint, Leon Cooperman, feels that Linn is a good company and as do companies such as Wells Fargo, Credit Suisse, Merrill Lynch, Raymond James etc.

        So all things considered, in a world of risk, Linn seemed to offer a viable opportunity. So instead of a stop loss I'll just patiently ride out any tempest in a teapot, collect the dividends and continue to believe in a management team that has been successful in the past.

      • Two square inches inventing new friends. Although Heaven help me Sweetie Willie seems to have joined a new KKK assembly.

        rrb is into using terms like twice cook bean justice for Mexican villagers. So please be aware of the creature running delusional here.

      • No future pensions or Social Security yet you think that the country's economic fabric won't be so tattered that sound investments will actually exist? (And you forgot to deep-six Medicare.) I can't gauge whether you're an ebullient optimist or a hand-wringing pessimist. Maybe we'll luck out and have climate-change lead to the country's, in which case an investment in row boats is worth consideration.

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