Is LINE buying these bonds back at 70 cents on the dollar or calling them? If they are allowed to go into the open market, they could buy back over $2.5 billion in debt. I know they should be buying back stock at these prices but buying their own debt at these prices is zero risk for management. and a prudent exercise for the company.
Bonds are the biggest bubble in the history of mankind. No sane person would lock up their money for negative real returns for for 10 years, or 1% for 30 years. This bubble has been fed by endless government support and algos that play relative rates, and drive the insanity further and further.. When it bursts, 30 year bonds will trade for 30 cents on the dollar.
Bonds can work just make sure you ladder your durations and weight yourself for shorter durations (5 years or less) which means you will earn about 1% on your money. Beats the crushing of LINE...at least in the short term. But if you have owned LINE over the last oil cycle, you have made a ton of money...its just ugly when you look at the last 12 months.
You are correct, the value of the company no longer matters. The fact that we have no rules around shorting stock means Hedge funds can flood a market with unlimited amounts of stock. This will continue as long as it works. So far, this has worked for over a year on the limited partnerships. Until management takes a stand and announces either they are taking the proceeds of all the hedging and buying back stock than we are in a free fall that could go to $8.
I don't follow GNW, but is this loss a change in STAT reserves or just writing off, goodwill and active life reserves and these numbers flowing through the GAAP earnings statement? I am surprised that I found no dialog on this issue in the press release.
This is also your Federal Reserve at work. Insurers can no longer earn a decent amount on reserves.
Well played. I like selling just out of the money calls against my position. I end up earning close to 30% including the dividend. Every once in a while you get called out, but then a little patience gets you back in at a lower number. I really think this can be a $32 stock so it will take some patience to not sell calls until this is back close to $30.
Of course, with earning 30% comes the down side of bear raids. Sometimes you just have to turn off the computer.
Why run with all the money. hold half your profit, say 300 shares for the longer term, it will be earning almost 14%, while this #$%$ settles out.
Can anyone say why the Yahoo expected earnings document had different numbers for the two companies? The LNCO entity is just a wrapper around a LINE share that allows it to pay the distribution as a dividend instead of a return of capital. Why would GAAP earnings expectations be different for the two entities?
The problem with doing this is your margin account does not consider them the same company even though they are. So it is not as cheap to do as it should be. The real question is why doesn't the CFO do this. He could issue 250 million shares of LINE while simultaneously buying back all 250 million shares of LNCO, pocket about $400 million for the company and keep the total shares outstanding the same.
That said, I have played the gap with options but its been only mildly successful, timing is everything with options
He will wait until it hits $34 on the coldest day this January. Tthen it will be buy buy buy, because the momentum story will be the high price of heating oil.
I have flipped once, but only because the LINE / LNCO difference actually flipped. There is something to be said for the simplicity of LNCO dividends vs the LINE partnership distributions come tax season. I really think that LNCO should trade above LINE as it originally did., but really it depends on your individual tax situation.
Considering LNCO is essentially a shell that owns a share of LINE, that much of a difference is insane.
That said, all the new longs have to remain calm. Ride this to $28 and then think about selling upside calls against your position to increase your yield to closer to 25%. This will pay for itself in 4 years if played correctly and then the yield lasts for another 30 years.
$30 was only a month ago. I put it at 20% that we are there before the end of the year. Especially, it the CFO is reworking the balance sheet. LINE debt is below 8%, divy at 13%. He has limitations on what he can do due to managing the debt to equity ratio, but he has to be trying to take advantage of this issue.
LINE declares bankruptcy
ExxonMobil offer of $29/share rebuffed by LINE Management
No do not buy all you can with the dividend covering the margin interest. Buy 60% of what you can, this leaves some margin to prevent a call. The stock is in a free fall and really the ability of large funds to short at will is causing this fall. The bounce will be huge, but I have no idea off of what.
what I want to know is should management be buying the stock hand over fist or buying oil futures? They have $2.3 billion to use and they better be acting!
I also bought more, but it is still gut wrenching. I can't find any real news, so someone is shorting the hell out of this. It would be nice if management announced that they had used half of the 2.3 billion to buy back shares and the other half to pay off debt. This would dramatically impact cash flow for the positive.