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Linn Energy, LLC Message Board

  • gpd8252 gpd8252 Feb 19, 2013 8:04 AM Flag

    Major sellers

    If you've been following the news, UBS and Credit Suisse are both subject to very large (billions) in fines for market wrong doings. It seems that both are large shareholders in LINE. It looks like some large shareholder is dumping shares. Putting two and two together, I suspect a couple of Swiss banks are raising cash to pay their fines. (LINE is dead money for the next three months as its just gone ex-div) I intend to take advantage of their misfortune and am adding to my position in LINE.

    Sentiment: Strong Buy

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    • LINE has been dead money on a total return basis. In retrospect, two years from now, you will know what I already know which is there was a major inflection point when it was time to end the ride on all the E&P MLPs, take the loss in yield in stride with the huge gains on the ride from 6/09, and then put the money into the very best, fast distribution growing, pipeline MLPs where commodity risk is more or less limited when compared to the E&P segment.

      Hitting that inflection point meant you could reinvest in these MLPs and let the growth of distributions systematically increase your yield to cost to the point that all of my pipeline MLPs yield to cost is actually 100-300 basis points higher that LINE, VNR, and EVEP which were my three E&P MLPs that I took the big ride up with beginning in mid 2009.

      E&P MLPs have been dead money on a capital growth basis for the last 18 months or more. Constantly raising new capital to buy new land to drill on. Drilling costs rising faster than inflation was the key inflection point to recognize that land acquisition and drilling costs are a big nothing while pipelines keep moving fossil fuels for a small fee thus owning a toll road in the energy infrastructure business.

      Its a similar metric to owning the E&Ps outside the MLP space. With the exception of a few major oils with good yields total return potential of the utilities has outshined most E&Ps over the past year and a 1/2.

0.180.00(0.00%)May 23 3:59 PMEDT