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Linn Energy, LLC Message Board

  • yelyacs yelyacs Feb 13, 2013 12:02 PM Flag

    short interest still rising

    short interest rose from 5.46 m shares on 1/15 (which itself was far higher than any time in prior year) to 7.3 m shares (3.7% of float) 1/31. Likewise, short interest in LNCO rose by 1.2 m to 3.5 m shares (12.7% of float) from 1/15 to 1/31. During this time, LINE price was rising to over 39

    in the absence of more recent short interest info, I cannot conjecture if the current swing down in LINE price starting begginning opf Feb can be correlated to further increase in short interest. But just recently it has become quite difficult to borrow shares of LINE and LNCO (LNCO was easy to borrow until last week).

    On another note, the spread of LINE-LNCO pairs trade has recent narrowed quite significantly (although this is not really unexpected as the spread in EEQ-EEP for example is historically pretty narrow, so hard to say how that relates to the share drop, other than liquidity in pairs trade drying up)

    in any case, LINE's recent underperformance (for example, small cap MMLP has gained $6 on LINE in the last 3 months) starting to make LINE look tempting on long side again, today's low marked a 78.6% fibonacci retracement of the rise from later december to the Jan highs

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    • I'd guess that any short increase is a bet on a decline in anticipation of an SO. (And any dilution is the same whether new units are in LNCO's pocket or LINE's.)

      • 1 Reply to ronharv
      • given LINE's business model of growth through acquisition and their stated intention of growth , another SO is a given. How much lower than current share price do SO's go for, typically?

        I'm guessing a little broad market weakness timed with a LINE SO and boom- we could see 35 again.

        the low of the day hit ~$2 under the 50 day moving average, a bit more below it than the recent high of 39 was above it, and stock TA site saying LINE support at 36.09 (which coincides with the fibonacci retracement I mentioned) and 35.12. So 36 looks like a solid entry, given downside is to ~35 (the cyclic low of LINE's recent price oscillations last years) and the recent high of 39 as current " channel", buying at 36 gives a good 3:1 upside/downside risk, high probability trade

        its reasonable LINE would have a stable floor under its price, given the low interest rate environment, LINE's stable and (somewhat) high yield , good distribution coverage, and growth model of "accretive" acquisitions

        but LINE's financials dont look that great to me versus small caps QRE or even MMLP (which also sport higher yields). The small caps also don't need huge acquisitions to fuel growth, thus may have more acquisition targets to cherry pick. I'm long shares and short puts of the small caps, but only trade LINE. But i do get excited when LINE gets a 35 handle :)

        FWIW american bulls site candlestick analyzer advising staying on sideline after their sell signal 2/6, when price closed at 37.79

        Also looks like the MMLP/LINE pair bottomed today

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