Member Q&A: Linn Energy
Wednesday, March 12, 2014
Q) The last two or three days Linn Energy (LINE, $29.16, Spy) and LinnCo (LNCO, $28.37, Spy) have gotten crushed with huge volume. Have you seen or heard any reasons for this type of volume? Could it be funds dumping the stock?
A) While we're not subscribers, we've heard that Jim Cramer told his paying followers to exit Linn and move into fellow MLP Kinder Morgan (KMP, $75.12, Spy). It then appears he later removed the stock from his charitable trust.
Given that Cramer is very popular and many people follow his advice, this likely led to pressure in the stock and the high volume, as his readers exited the name.
This doesn't impact our view, and we would like to stick around to see what the company does with its Permian Wolfcamp position. Investors were disappointed in Linn's guidance, but an asset swap for this desirable acreage in exchange for a more mature, low-decline producing asset could be nicely accretive to distributable cash flow (DCF) and lead to a distribution increase this year, which currently isn't baked into guidance or the stock price.
There is no change to our "Buy" rating on Linn or our $36 target at this time.
Bull Market's Research Team
Very volatile today, also, except it's finally recovering into the close vs dropping more. Odd....but maybe a big seller is finished.
Armour beats estimates; reports sizable decline in book value • 10:36 PM
Armour Residential (ARR) Q4 core EPS of $0.15 beats by $0.02.
End of year book value per share of $4.75 falls 9.7% from $5.26 at the end of Q3. Today's closing price of $4.34 is an 8.6% discount to Dec. 31 book.
Average net interest margin of 1.6% is up 36 basis points from Q3 as CPR falls to 4.8% from 8.8%.
Leverage of 6.92:1 is about unchanged from Q3. $4B of agency paper sold during Q4 leaving portfolio size of $14.6B vs. $16.7B in Q3. Company continues to shorten duration in 2014, selling $5.5B of 25-year and 30-year fixed rate mortgages thus far this year, leaving $1.3B of 30-years left to be sold. $3.7B of 15-year mortgages have been purchased.
13.375M shares repurchased during quarter at an average price of $3.89 each.
I was being sarcastic re Hedgeye and LINE, and I was buying LINE all the way down to the low 20s....it was a terrific buying opportunity, and I'll continue to buy all three of the Kinder Morgan stocks if they drop further. I think it's an excellent company with an outstanding CEO.
Do we have any hope of ever recovering all of the missed dividends over the past several years? Does anyone have any information at all? Thanks....it would be appreciated.
Do we have any hope of receiving any more payouts like a few years back? It's next to impossible to get any information on this company at all. TIA.
I received the paperwork associated with the class action lawsuit settlement with LIME. Since it's written in the standard legalese, does anyone have an idea of how much per share the settlement will be for those who held their stock thru the end of the time period? Thanks for your thoughts.
Hi, southernciticcgirl......it does look tempting down here......
I can't say that I understand the sell-off into the close again today....seems irrational.
Spectra Energy (SE) and Spectra Energy Partners (SEP) announced their business outlook and three year financial plan. Key highlights include: Spectra Energy 2014 distributable cash flow of more than $1.2B; SEP distributable cash flow in 2014 of $935M with a CAGR of 13% through 2016; At least 9% annual growth of Spectra Energy dividends and at least 8%-9% annual growth of Spectra Energy Partners distributions through 2016; 2014 enterprise-wide EBITDA of more than $3B; with a compounded annual growth rate of 7% through 2016; Investment of approximately $1.3B in expansion capital in 2014 and an average annual growth CapEx of approximately $2B through 2016; SEP's share of CapEx is about 70% in 2014; 60% in 2015, and 45% in 2016 Pursuing an additional $10B of natural gas and liquids opportunities over the previously announced $25B of opportunities through the end of the decade.
I just bought some MWSNF for the first time on its recent pullback. It seems to be a solid company considering its size with good management and backing. I was wondering if anyone who's more knowledgeable and familiar with the company had any thoughts or insight. Thanks!
Thanks for your informed thoughts, mtn. I just bot into PWE recently, and I hope you'll post more frequently in the future.