If you want to own KKR, which is essentially what will happen eventually, then I think you could sell KFN, take the proceeds, and buy KKR at a lower price later on. I think there will be an opportunity to buy KKR at the $22-22.50 level very soon.
It's an arbitrage play at this point. Since a unitholder would receive .51 shares of KKR for each share of KFN, the price will be dictated by the relative price of KKR. You are basically betting the KKR will go up, not down.
I had this in my retirement account. Sold all my shares at $12.29.
I figured just take the money and run because I don't think it is a situation where KFN is being "undervalued." If anything, it may be overvalued given the segment of the financial market KFN in which KFN invests.
Good luck to the longs who stick around.
Those who received the stock at the IPO price are also restricted, not just the original founding shareholders, venture capitalists, and employees who owned shares prior to the IPO.
Looking at the actual (as opposed to estimated) share count, the math was off. $20 Billion divided by 544.7 Million shares outstanding yields a price of $36.72--the maximum Cramer said anyone should pay. About 20% lower than where it is now.
maximum works out to a share price in the range of $31.25 to $31.50. There would seem to be good ground for the stock to further correct unless the stock price is propped up by the investment houses who brought the IPO forward (which is what they tried to do with Facebook, but ultimately failed because the downward pressure was too great).
There was a time when trading LINE was fairly reliable. One strategy was to buy after the ex-dividend date around $35 and sell before the ex-dividend date--usually in the $38.75 to $40 range. But then, things changed.
LINE switched from a quarterly distribution to a monthly distribution which pretty much all but eliminated trading in that $4-5 channel. The monthly distribution has the advantage of providing shareholders their money sooner than they would otherwise receive it.
We also had the short attack for the past several months. The various bases for that attack, i.e. concerns about insufficient funds to cover the distribution, whether the merger would go forward, the accounting for hedges, etc., have largely fallen apart over time.
So that got me to thinking about the GS downgrade from buy to neutral based upon the lack of catalysts. From a trading perspective, that's probably a good call. There really isn't any expected bad news for the shorts to trade on. For the longs, capital appreciation will probably be muted until an increase in the distribution is announced and it is demonstrated that distribution is fully covered through revenue.
In the meantime, while investors are waiting to see how this all plays out, they are collecting a 9-11% yield depending on their cost basis. A rather good return in a low interest rate environment which portends to continue for a long time with Bernanke disciple Yellen taking over as Fed Chair.
Right now, if one is invested in LINE for the income, there's no real reason to sell. Shorts, it would appear the volatility has been wrung out of the stock as some of the unknowns have been answered or resolved in a positive fashion for LINE, which should eventually lead to further short covering as the stock goes nowhere but sideways for awhile.
Two distinct issues: (1) the merger between an MLP and a C Corp; and (2) the accounting for hedges.
The former has been resolved; indeed, the merger is going forward. That's why the S-4 was filed in the first place.
The latter is unresolved, but it would appear that there will be no material effect on LINE going forward as the distribution is fully covered for Q4.
Due to the federal government shutdown for 17 days, the SEC, being non-essential in nature, probably got behind.
The SEC was addressing two distinct issues. One was the merger, the other was LINE's accounting.
The former has been resolved; in effect, there are no barriers from the SEC relative to the merger.
The latter remains unresolved.
About half congratulated the company on the results and progress. Others just asked for clarification on production related issues. I would say neutral to positive CC in terms of tone.
Primarily GNA savings. From a personnel standpoint, ready to go.
LOE savings not estimated yet due to budget and intergration process. Will provide in early part of next year.
.01 in 2013 tax burden to LNCO
.07 in 2014 tax burden to LNCO
Amount of deductions increased which offsets increased cost of transaction..
Deal better from a tax standpoint than the previous version.
Distribution outlook: fully covered for 4th quarter.
Hedged 100% of natural gas and oil production through 2013.
85% of BRY's production hedged at $90 per barrel for oil for 2013.