Before switching to LNCO to take advantage of the gap, I had lots of LINE in an IRA for five years. UBTI was nothing but losses that can be carried forward for twenty years. The canard about avoiding all MLPs in IRAs is popular among folks who don't trouble themselves to check out UBTI on the specific MLPs that interest them. Some aren't good in IRAs; some (like LINE) are.
C.C., Linn certainly could announce at the Q1 '15 presentation that if business continues as they expect it to, they'll increase the dist. beginning, say, in Q3. That'd probably have the same effect as an actual dist. increase in Feb. or March of '15.
Re the 2016 options, I also have so many that I can't buy more without being grossly imprudent.
Titus, the sale is largely in the current price, I think, so a bump to the 32s is about what LINE will see from a sale (assuming the deal is a decent one). However, if the November CC for Q3 provides further verification that Linn remains on track with a rising DCF, then I think there's a reasonable shot at the 34 - 36 level. Linn has already stated that there won't be a dist. increase until the DCF is a sustainable 1.10. "Sustainable" suggests to me several quarters of a 1.10 DCF with sounds indications of more to come. So a premature dist. increase would be a bad idea. But if the company steadfastly hews to its latest strategy and does so successfully, the PPS of the twins will rise by discounting a dist. increase and the 2016 options will plaster grins to the kissers of those who buy at prices near the middle of the current spreads.
Gardner, you mean LINE, not LNCO, in most of your statements. Also you said, ". . . everything thing has been solved and set right. . . ." That's certainly not accurate. Financially, Linn Energy was in far better shape a couple of years back with a conservative hedging strategy that had been working well for several years and a DCF that provided a margin of safety clearly superior to what it is now. By altering its strategy (several times actually) Linn has lost significant credibility, which it now (if the company claims can be believed) is attempting to regain by returning to its former successful strategy of mature, low depletion production and reduced costs for expensive new drilling. The lower PPS reflects suspicions that upper management will get bored again and once more take unnecessary risks because it gives them something more interesting to do. It's the Classic Coke syndrome. But if they actually do what they say they'll be doing, then over the coming year the PPS of both LINE and LNCO will respond.
Wisdom from Thegreatone on Aug.8: ".I don't care what Raymond james says lnco will never be a premium to line"
Well, there goes the Go-to-guy-for-penetrating-insight.
No one, Auri, but the TDAmeritrade computer "sees" the trade trigger (stop loss). The order is instantly entered only if a given stock trades at the bid or ask that I cite. I'd never use a regular stop loss that's visible to NASD traders.
Re the stops, I was thinking more in terms of yesterday's close than the price I bought in at. Ten minutes after I saw that I bought the bid was at 30.95, so my stops weren't that close anymore. I came within a squidgen of selling. But, of course, squidgens don't count. Coulda, woulda, shoulda.
Well, the bargain basement had a sub-basement and I got stopped out at 30.68 and 30.67. Meanwhile LNCO seems to be fulfilling the Raymond James analysis (I have no idea why) and, at this moment, is actually a dime ahead of LINE. My rather large core holding is in LNCO as an income producer, so it doesn't matter much to me how the gap between the two bounces around, but it's interesting in any case.
Prior to the market opening I placed a "bargain-basement" order for 2500 Line at 30.79 and another 2500 for 30.78, figuring there wasn't much of a chance of executing at those prices, but why not give it a shot. Anyway, after breakfast I saw that the trades went through, which doesn't necessarily mean I'll make money on them. Short-term anything can happen. I'll put in a couple of protective stop losses (invisible trade triggers per TDAmeritrade) to avoid getting killed. . . . I hope.
Well, I would have taken a big bite of LINE if it broke 30.80, as I generally do better if a bargain-basement price presents itself. Otherwise I'm inclined to sit it out. Considering that I've got 2016 options up to my eyeballs my rooting interest is for the upside anyway.
Having sold at 6.31 A.M. PST, wine before breakfast (though a fine idea in general) seemed a tad early, but we will be dining out tonight, and I'll pick up the tab for several other relatives as well. I decided against the nyahing and will play the bon vivant instead. That way I won't have to sleep in the back yard tonight.
And re Linn, I think only a couple of things are likely to move the units to a higher base. Those are a good deal on a land sale or an excellent November earnings report, the latter being the more important of the two. Having both occur would be best, of course.
Usually these AH trades are meaningless, but Nasdaq shows a n AH 50,000 Unit lot at 30.9357 and then a smaller retail lot of 1,200 at 30.8470. Betting on a bounce tomorrow, I wagered right near the close on 6,000 units at 30.86 thru 30.88. Yesterday's bet at 31.01 gave me a morning sale at 31.26. I confess, thouigh, that my short-term impulse betting leads more often than not to regret. Plus awakening earlier than I prefer.
Timing inexplicable ups and downs absent news is a tough game. (After I won this morning my, wife - that pillar of supportive strength - said, "Don't worry. You'll probably give it back." At least she didn't add, "And then some.")
Options can be a hedging vehicle: sell the stock short and buy calls or buy the stock and get puts. Also, the B/A spread often allow trades to be made between the two.
There are also rumors of Maliki moving to Montana and then running for president. Gotta respect those rumors.
If you like the inexpensive calls, CC, why not the 2016 30s? For about $.80 more than the 32s you could be a buck in-the-money from the get-go and would need a PPS of only 32.30 to break even. So at 33.50 (which we're both confident about) instead of breaking even you'd be ahead $1.20. Of course the ticket for the ride is a bit more expensive.