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bbandassoc 893 posts  |  Last Activity: Jul 16, 2014 5:14 AM Member since: May 31, 2011
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  • Reply to

    Sell on the news.

    by nedflanders000 Nov 6, 2013 6:14 PM
    bbandassoc bbandassoc Nov 6, 2013 10:14 PM Flag

    It could, but it's still lower than it was when income was half as much and iron ore prices were lower. It all depends on how they guide in the morning. If they are bullish, the stock will continue to climb. If not, the stock could pull back and wait for more data. We still have the tax decision by Nov. 29th and the analyst meeting on December 2nd as near-term potential catalysts. And, they could also increase the dividend materially, especially if the tax situation is favorably concluded.

  • Reply to

    Why isn't the price popping?

    by typea1949 Nov 6, 2013 5:19 PM
    bbandassoc bbandassoc Nov 6, 2013 10:05 PM Flag

    We need to hear what the guidance is in the morning. Stocks with great quarters aren't being rewarded if they have weak guidance. Based on what VALE management has said to date, I don't think the guidance will be weak. I think they will argue the demand will be there to support the price regardless of increased supply and that all the fear of substantive price erosion in 2014 is overblown and unwarranted. IF they say this, the stock will continue it's climb to the mid-$20's in the coming months. GLTA

  • Reply to

    Down grage today on Linn!

    by nobleonetoo Nov 6, 2013 3:00 PM
    bbandassoc bbandassoc Nov 6, 2013 6:02 PM Flag

    If a person chooses to make up their own facts, then, they can justify anything. The truth is that LINE traded pretty steady at $38 after the BRY deal was announced and before the short attack and weak quarterly results. The SEC inquiry happened to ensue, but it's not reasonable to suggest the stock has recouped its pre-SEC level when it should be the combined effect of the short attack, weak quarterly results and the SEC taken together. So, I would argue the level is $38 and, if we reduce that by 8% for the increased dilution of the new deal, then, that takes it down to $35. So, if $35 is our starting point, what else do we know. First, there is another acquisition that has been made. Second, Q3 and guidance for Q4 is much improved. Third, BRY has outperformed expectations. And yet, the SEC inquiry appears to be unresolved, but the risk of any major impact appears materially reduced. All told, IMO the stock should trade between $32 and $35 right now. If they complete the BRY deal and prove the integration is accretive, thus raising the distribution at minimum to the previously projected $3.08, the stock should then move even higher (depending on any SEC news, of course). GLTA

  • Revenue: Est: $12.29B Actual: $12.9B
    Diluted EPS: Est: $0.56; Actual: $0.72

    Very solid quarter. No guidance provided in the release (unless I skimmed past of it). Perhaps on the call. If they give solid guidance, the stock is going to move higher tomorrow. GLTA

  • Reply to

    whisper number?

    by thereisonlyonebo Nov 6, 2013 12:03 PM
    bbandassoc bbandassoc Nov 6, 2013 1:29 PM Flag

    No, but it seems to me a very strong quarter has already been telegraphed among what we know about China, iron ore prices, cost reductions by VALE, the Real weakness, etc. I am guessing 85+ cents adjusted for FX and the stock breaks through $18 tomorrow. That would still put it below where it was when earnings were half as much and iron ore prices were 30% lower. GL

  • Reply to

    SHOCK HEADLINE.....

    by s.eranger Nov 5, 2013 12:33 PM
    bbandassoc bbandassoc Nov 5, 2013 3:03 PM Flag

    The S-4/A is done. The SEC has no further questions on it. So, the deal can move forward. That's separate from the continuation of the SEC inquiry.

  • Reply to

    Sounds to me

    by aghfella Nov 5, 2013 11:51 AM
    bbandassoc bbandassoc Nov 5, 2013 12:25 PM Flag

    Couldn't get on call, but from the tidbits so far, would I be off base to suggest that the reason the price jumped to 1.68X was because it was a premium needed to get BRY to go through with a stock/unit deal with the SEC inquiry continuing? And, while the deal appears back on track, the price paid and the SEC inquiry would seem to put a lid on the stock for quite some time. Did they say anything at this point about the level of synergies available in 2014? Set a target? Thx.

  • Reply to

    Cramer is a blowhard

    by keithmckinley Nov 5, 2013 11:02 AM
    bbandassoc bbandassoc Nov 5, 2013 11:47 AM Flag

    Will be interesting to see if he dumps again based on the news that the SEC inquiry continues since that was his reason last time for dumping and his belief it was over was his explanation for buying back in.

  • Reply to

    Are they doing this underwater? Can't hear!

    by ruby.thedyke Nov 5, 2013 11:13 AM
    bbandassoc bbandassoc Nov 5, 2013 11:29 AM Flag

    At least you are on. I can't get in. Never had trouble before. Please post anything significant. Thx

  • bbandassoc bbandassoc Nov 4, 2013 8:15 PM Flag

    No doubt, the incremental dilution of the higher bid for the combined company is about 8%. So, if you had hoped to recognize $40 per share in the near-term, you may want to reset your sites to $36.80. But, I would argue that this management team has delivered year after year and none of us know the facts they considered in upping the bid, so we should give them the benefit of the doubt. For example, I doubt they had other meaningful acquisition alternatives. Anything significant would have required equity and no one would want to talk to them when they were subject to an SEC inquiry. With BRY under their belt and the SEC inquiry behind them (if it is), then, they are primed to pursue their strategy of making accretive acquisitions that allow them to raise their distribution, even if the BRY deal ends up taking one step back for two steps forward.

  • bbandassoc bbandassoc Nov 4, 2013 8:07 PM Flag

    From an operating perspective, they claimed they could increase the distribution to $3.08 with the BRY deal and they have even made a supposedly accretive acquisition in the interim. So, if they can no longer make that commitment, it would raise meaningful concern that they now have to prioritize getting this deal done with the associated dilution v. raising the distribution. And, if they are going down that path, it makes me wonder if they have stretched so far to get the deal done that the distribution itself is a stretch post-dilution. Also, I still want to hear how they explain the increased transportation costs in Q3 since one explanation is that they pushed to recognize revenue that is not sustainable.

    I know this all sounds negative and I don't mean to be. I am very long LINE, but these concerns could limit the upside. At the moment, I think the patient investor will be rewarded in a few months when the synergies become apparent, but I am not so certain the next few months will be up and up unless they raise the distribution to demonstrate the strength of the deal, even at the higher price.

  • bbandassoc bbandassoc Nov 4, 2013 7:16 PM Flag

    By the time of a vote, you can bet the spread will reflect within a couple of pennies the 1.68X ratio (unless there is reason to question the viability of the deal). So, it does appear that the difference in LNCO and BRY SP's need to increase. Anyone selling LINE/LNCO to buy BRY to capture the difference will forego a couple of months of distributions and need to consider their tax consequences. But, for some people, it might make all the sense in the world to sell their LINE/LNCO units and buy BRY now. As for me, I am waiting to hear what management has to say in the morning before deciding anything. If they aren't still raising the distribution to $3.08, then, I will have to seriously consider whether they have overpaid and the implications of such. GLTA

  • Reply to

    Good Point From Motley Fool Author

    by rlp2451 Nov 4, 2013 11:44 AM
    bbandassoc bbandassoc Nov 4, 2013 11:56 AM Flag

    Nice point. Also, BRY has delivered and raised their guidance while LINE missed until the most recent period. And, the spike in transportation costs for LINE in the period does make me wonder if it wasn't related to revenue recognition needed to deliver the quarter rather than true repeatable progress. On the other side of the ledger, LINE did make another accretive acquisition in the interim. We shall see what they have to say tomorrow. Worst case (I am so good at predicting here, LOL), they have to maintain rather than raise the distribution for awhile as they try to get even more costs out of BRY and find additional accretive bolt-on acquisitions. Somehow though, I think they will still raise the dividend to $3.08 so it doesn't look like they stretched here. They want the story to read that they paid more because it was worth it and prove it by still raising the distribution.

  • Reply to

    Shorting BRY

    by williamlebotschy Nov 3, 2013 11:29 PM
    bbandassoc bbandassoc Nov 4, 2013 9:47 AM Flag

    Thx, I missed that this morning.

  • Reply to

    Shorting BRY

    by williamlebotschy Nov 3, 2013 11:29 PM
    bbandassoc bbandassoc Nov 4, 2013 8:03 AM Flag

    It's opposite day. Going long BRY and short LINE today might be better. Very glad they announced this morning and not Wednesday. I am tucking my money to short BRY back in my pocket as we speak, LOL.

    But, I am long LINE and will just wait and see what management has to say Wednesday. I don't know if it's a fair price to pay or not, but the increase to 1.68X is an additional 10% dilution for LINE shareholders. GLTA

  • on RIo Tinto's largest shareholder discussing how China mineral demand will continue to outstrip GDP growth in the coming decade due to urbanization and industrialization. He notes that this is why some miners are increasing supply, while some analysts worry of a glut. FYI and GLTA. It should be a very good week for VALE shareholders when earnings are reported. Then, perhaps a few nerves set in as we approach the Nov, 29th deadline for Brazil to decide what they are going to do about the tax situation (though it would seem a worst case scenario is already priced in and it could only be good for the stock if it's better), and then, the Dec. 6th VALE analyst meeting.

  • Reply to

    Short BRY

    by bjbandassoc Nov 3, 2013 2:53 PM
    bbandassoc bbandassoc Nov 3, 2013 4:06 PM Flag

    If the deal goes forward, you will see the prices of the two stocks come together in some way where BRY stock trades at 1.25X that of LNCO (if that's the ratio of a final deal). That's not to say BRY shareholders won't vote, in part, because they would rather have the higher dividend and more potential upside of the LINE/BRY combination, but this idea that keeps being proposed that the NPV of LINE is really $70 is simply not correct. The current value of the future distributions and associated tax benefits are priced into the stock in real-time. It's not some "free bonus" that people get for buying the stock.

  • Reply to

    $33 on Wednesday

    by wall.street13 Nov 2, 2013 10:43 AM
    bbandassoc bbandassoc Nov 2, 2013 11:58 AM Flag

    I view the lack of an announcement as encouraging. It means the parties are allowing LINE stock to recover. That could be because LINE has refused to negotiate the deal, but BRY doesn't want to walk away, so they have no choice other than to hope the stock price gap narrows to support the current offer. Or, it could be because LINE has told BRY that they are open to sweetening the deal if the stock price gap doesn't close in the next few days or couple of weeks.

    BRY management is highly motivated to get this done. They checked out mentally long ago. They have emotionally moved on, but are being held hostage by the process. They won't take a really bad deal, but they will give the deal every chance to come together. Therefore, I believe the chance of the deal being called off Wednesday is near zero.

    My guess is we have a 50 percent chance of hearing the deal is done at some agreed to ratio on Wednesday (higher chance if LNCO stock climbs Monday and Tuesday). And, we have a 50 percent chance of hearing that both parties remain committed to the deal and expect to provide further information in the coming days or couple of weeks (allowing LNCO stock further time to recover). I don't see it dragging on longer than a couple of weeks though. Just my guess.

  • Reply to

    Latest SA Article

    by rlp2451 Nov 1, 2013 1:25 PM
    bbandassoc bbandassoc Nov 1, 2013 5:06 PM Flag

    I suspect BRY is up because there are people betting on a higher bid and LNCO hasn't covered the gap because people think they may be agreeing to additional dilution as well as people just waiting now for Wednesday. But, if the bid stays 1.25X, then, we should see LNCO move up (less dilution than currently being expected at a higher bid) and BRY come down (no higher bid coming).

    Now, can they agree to pursue a vote with that kind of imbalance. If BRY management really wants the deal and LINE is saying 1.25X or nothing, then, they must choose between seeing how things play out or walking away. And, perhaps the middle ground is a somewhat higher bid, but not a lot, so BRY management can save face moving forward, but LINE not overpay.

  • Reply to

    Latest SA Article

    by rlp2451 Nov 1, 2013 1:25 PM
    bbandassoc bbandassoc Nov 1, 2013 4:03 PM Flag

    The gap will take care of itself once the final price of the deal is announced. And, highly unlikely shareholders will vote against BRY management, even if a gap remains. In fact, I don't recall a deal ever failing to be completed because shareholders voted it down.

    Still, the negotiation could be ongoing and not complete. LINE could be sticking to their guns on the price and BRY could be saying it must be higher, or they will terminate. I would guess all that will be resolved by Wednesday, if not already, but maybe not. What's going on behind the scenes is truly anybody's guess at this point, but my guess is they both want this deal done and it will get done at the current price or some other. GL either way.

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