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Linn Energy, LLC Message Board

  • jackhiller Feb 19, 2013 11:54 PM Flag

    Latest Attack (courtesy of rip) reveals stark ignorance or intentional deception

    There were two key mistakes in this bombastic post that bear on available cash to pay distributions/dividends, advanced maintenace and facilities development, and property acquistions, as LLC management determine to be inb the best interests of unit/share holders. Central to the arguments made were use of GAAP and EBITDA-- and those of you who recall the many, many mistakes made by SA and Motley Fool writers over the years who never bothered to study how the company earns its income will see these mistakes repeated, only with the passion (fright) of a Short.

    How many times have we all discussed that GAAP produces meaningless results for the hedging program, because Linn does not play derivatives as a trading desk, but backs its hedges with products, and when a hedge price exceedes production costs, as has thus far always been the case, Linn makes money, granted it may have a hypothetical opportu niy cost when oil spikes from time to time over a hedge limit. The SEC has simply not gotten arround to eliminating meaningless GAAP for producers, whereas it is usful for nonproducing commodities traders.

    This Short also makes a big deal about misuse of EBITA, but if the Short had done adeqaute research, it quicly would have become apparent that Linn does not use EBITA for free cash flow reporting, but Adjusted EBITDA that does subtract the costs reducing available cash (every single Linn presentation repeates a slide showing that it is using Adjusted EBITDA, not the strawman EBITDA reporting the Short is attacking as a misrepresentation).

    Linn's successful history of passing DD review by bond and unit/stock underwriters, plus ongoing review by many qualified analysts demonstrates its accounting is practically sound. Odd the they Whiel analyst suddenly had a qualm about cash flow after years of seeing the same auditing treatment, and truly suspicious when coupled with a short attack--hmmmmm.

    As for myself, I've not had any Linn for a year, simply because I have been willing to take the risk of investing in a few very high yielding hibrid MREITs which properly frighten most investors (these are accounting beasts, and GAAP also causes them mischief by typically creating paper losses that roll off when the mortgage portfolkios mature).

    Linn also has some possibly exciting shale formations for oil in addition to the Hogshooter, but I do not have hard facts about what possibly lies lurking deep in the Permian basin.

    Good luck to all

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    • Jack, do you have any thoughts on the new Berry acquisition & the CC?

      It looks like some may be now trying to cover or just add a bit.

      I first thought it might be norris, but he seems to let us know when he adds more LINE.

      ...after hours


      $ 37.68


    • With all this couneling and your up beat report. You can't come up with any couch cash to buy LINE.

    • Much appreciation for the illuminating post.

      • 1 Reply to ronharv
      • Not sure why the "analyst" at weill is being given any credibbilty. If you look at his Linkedin in profile, you will see he has not been an analyst very long at Weill. In fact his experience is with AECOM, an engineering company. Here is his background

        David Amoss, CFA's Overview
        Current Equity Research at Howard Weil
        Past Associate, Economics at AECOM
        Analyst at Economics Research Associates
        Education University of Georgia - Terry College of Business
        190 connections

        David Amoss, CFA's Experience

        Equity Research

        Howard Weil

        Privately Held; 11-50 employees; Research industry

        May 2010 – Present (2 years 10 months)

        Associate, Economics


        Public Company; 10,001+ employees; ACM; Civil Engineering industry

        September 2007 – May 2010 (2 years 9 months)


        Economics Research Associates

        Privately Held; 51-200 employees; Real Estate industry

        January 2007 – August 2007 (8 months)

        David Amoss, CFA's Education

        University of Georgia - Terry College of Business

        1999 – 2003

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