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Linn Energy, LLC Message Board

  • coastaldevelopmentandfinance coastaldevelopmentandfinance Mar 12, 2014 3:11 PM Flag

    could this be stock being sold by prior berry owners

    otherwise this does not make sence

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    • disagree, for 2 reasons: 1) BRY holders inherited LNCO, not LINE, shares

      2) the very low probability of distribution growth revealed in the last report and the very real possibility that even the current distribution will not be covered (LINE's guidance is for NGL's to be $40/bbl in 2014 vs 30.96 2013; if their realized NGL comes up sufficiently short of guidance, then the projected 1.01x distribution coverage ratio wil also fall short) could also be reasons for some holders to sell

    • Could be to some extent. Most of these large stock deals are followed by a period of selling pressure until the selling exhausts itself and the synergies are realized a quarter or two down the road. A lot of the early synergies in this deal appear to have been forfeited with the higher purchase price. Nonetheless, we are trading back at a 10%+ distribution rate and, unlike not too long ago, the distribution appears secure with the potential to be raised over time and the SEC overhang seems to have been resolved (meaning also the business model is in tact). I am willing to be patient and add on the dips.

      • 1 Reply to bbandassoc
      • If Linn could overextend itself with a non-accretive purchase that was supposed to be accretive and then provide guidance that was way off the mark, winding up with a very iffy distribution coverage, then what does that say about management acumen? Or credibility? Or shareholder trust that the company is savvy enough to make the right decisions for a prosperous future? Right now I'm confident that 2014 will offer no dist. increase (nor should it) and have my doubts about 2015. Luckily (for me anyway) I'm under water just a small amount, but the high income and hedges provide enough comfort for me to remain a LinnCo holder. I have certainly lowered my assessment of the company's leadership though.

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