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Linn Energy, LLC Message Board

  • nxyluck nxyluck Sep 18, 2013 10:59 AM Flag

    SEC Make Things Worse?

    It sounds to me like management has for all practical purposes stated that their distribution policy going forward will be to pay out what they think is appropriate. If analysts are no longer able to estimate coverage ratios, that would seem to add an element of risk in commenting on the sustainability of the distribution.
    In my mind, what management has really done is to take the position that the payout will be calculated based on the way they have measured DCF in rhe past regardless of their reporting requirements. Hope that doesn't muddy the waters for those analysts that have had such a positive view of LINE.

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    • The distribution will be reduced to meet DCF and the stock price will rise ,because the market believes , management is taking the proper direction to solve the problems. End result , the total return will be the same or better. There are way too many commentators speculating about this stock , without waiting until the next two quarters , and see how the corrections play out. MLPs are about total return over time. Considering if you bought LINE two years ago at at $38 , and now the stock is $28 , if you can not handle a short term loss of $ 1000 , which can be written off the many many MLP gains over the same time frame , and you received 10% plus yield, you are better off not investing in this sector , unless you plan on staying for 10 years or more. Just think if you bought the same 100 shares of Apple at $700 , then LINE looks like a much better choice , in the same time span. My prediction is LINE will reach $38 before Apple hits $700.

      Sentiment: Hold

    • apparently, it didn't make things better. OK with me. The market clearly doesn't like negative views on accounting practices. IT'S ACCOUNTING.

    • The BullMarket doesn't agree with you.

      "Right now, while it appears the SEC wants Linn to make some adjustments to the way it presents some non-GAAP data, the changes look more like semantics than anything else. None of the numbers have been changed, and it's easy to back out the new metrics to get the old DCF number. Importantly, it also looks like the distribution or future increases will not be impacted in any way by these changes.

      The S-4 filing is a long document, and we'll look to scan analyst notes later to see if we may have missed anything. However, if the above adjustments are the only big changes that come out of this, then we'd view it as very positive. Our "Buy" rating and $36 price target remain unchanged."

    • dans782 Sep 18, 2013 3:52 PM Flag

      Divy cut on the way.

    • Ok read the appropriate section. I don't agree, all it seems to be doing is changing the format of disclosure - you can recalculate the DCF, if you want to as all the data is still displayed. They will continue to show the "maint capex" but they just won't call it that anymore. collossal waste of time and money. End result is still this, do you think LINE can continue to fund put option purchases and a portion of their capital with debt and equity indefinately and therefore their payout ratio is fine or do you think eventually they won't be able to layer on more debt/equity in which case the distribution will be cut to allow the company to pay down some debt. I bought this dip, heavy

    • struggling to get through the document - where do they discuss changes to DCF calc?

    • Agreed, what will management be able to say to investors? DCF gave us a consistent way to measure performance across the industry, the only discretionary component being maintenance capex. If they can't disclose an estimate of that number, or disclose "coverage", then investors will be left to try and figure it out on their own. Transparency will be lost. The government just damaged an entire class of investments, assuming this carries over to other companies. It's a mess.

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