More than one million units at a cost basis of . . . $0. That's because Linn Energy has been doing so well since the high 30s. It's clear which shareholders are most important to Ellis and friends. Geez!
Hey, RJM, be careful about Hefner in that tub, as he takes his walker with him and tends to fall in while flailing around with the thing in exuberantly dangerous fashion. More than a fashionable nose or two has been broken while Hef obliviously untangles himself from his thoroughly soaked robe.
Oh yes. The debt to equity ratio is far worse than any other of the Energy MLPs. It's not just a number. There are huge carrying charges which are destructive to cash flow. While a number of people are misguidedly trumpeting how swell the Blackstone deal is, the gorilla in the room should really be the center of attention. But that requires a rudimentary understanding of a balance sheet and a triumph of objectivity over hope. Not about to happen with most posters.
I remember a time when a post of such transcendent lack of thought wouldn't have appeared on this board. Oh well. Times change.
So the CFO believed his own cheerleading, gambled, and lost (although whether he actually paid for the units I don't know, so many of them having been generously distributed at no cost). An overconfident CFO seems to be sound reason for some apprehension. I wonder how many other things he's wrong about.
Well, Maryanne, we know that Blackstone has done well over the past few years and that Linn has done horribly. For Linn the best that can be said is that they don't stand to lose anything on the deal (as far as I can tell) and might even make a few bucks some years from now. But folks are sure blowing this out of proportion.
The debt issue is the 2/3 of a billion dollars from cash flow that Linn has to pay annually to avoid default, not the 1029 due date. If oil remains low (and it probably will for some time to come) Linn's interest payments will have to come from distribution destruction. After that is selling assets at fire-sale prices. There's an increasing and scary risk that this will happen. I certainly don't want it to, but the threat is growing. And the downward PPS momentum reflects it.
I owned LINE in two different IRAs from 2008 to 2013 and didn't pay a cent in taxes. Nor did I pay any when I traded Linn in my IRA beyond my core position. Linn reported nothing but UBTI losses year after year so that I now have a carryforward against possible (though unlikely) gains should I return to Linn in the future for my IRAs. Where did you get the misinformation?
Did that odd dividend number come from an authoritative source that you'd care to name? It sounds like another one of Limbaugh's fabrications. Or some internet humbug.
$70 oil by May is a big stretch in light of the global economy with its decreasing oil demand. And there's the Saudis stated desire to keep oil at no more than $60. So is your plan to ride this to the bottom if you're wrong rather than to preserve as much capital as you can? As I see it, the serious balance-sheet problems and the global context for oil demand make Linn an awfully risky bet.
1. Linn's bonds are rated B. That's a full 5 levels down in junk bond status. Your statement's a blatant falsehood.
2. Your last sentence makes no sense.
3. Name-calling is the weak man's imitation of strength.
The return is annual. It could take 8 years before BX gets its principal plus an annual 15% back. After that there's the unknown factor of how much will be left after depletion. Linn could possibly have 95% of not much. Moreover, Linn's big problems are now and the next couple of years.
Anyway, I can understand why I'm a clown in your eyes as you seem to lack any in-depth knowledge about what's going on with Linn. Do you comprehend Linn's ROE? Its debt to equity ratio compared to the industry? Its disturbingly low profit margins? The reasons it's below 10 and not above 30 as it was in the recent past? Why its bond rating is so low? Why futures prices inhibit further hedging? Just a bunch of clownish data, right? You may be happy in your blindness even as its financially biting you in the rear. I was out in the 23s and lost money. But I wasn't self-deceived. And I'm not shackled to a problematic company selling below 10 as you are. So enjoy the circus while you can, and be sure to wear a helmet and seat belt for the early Feb. CC.
"Their debt isn't even due till 2019." On the surface that's so, Kenny, but bonds come with covenants that can drive a lot of actions when there's fear of default and financial distress by a company, from cutting distributions altogether to forced sale of assets to notes (bonds) being called in whole or part prior to maturity date. Only a given note's prospectus spells out the contingencies that give creditors various degrees of control. These covenants are more likely to exist (though not necessarily) with low-rated bonds like Linn's than with investment-grade vehicles.
The BX deal, while interesting, offers much more to Blackstone than to Linn (which is to be expected because Linn won't have much skin in the game). Moreover, it'll be a number of years before any meaningful payoff comes Linn's way, and even that'll require good luck. I'm not denigrating the deal, but if this is a home run, then Linn is in worse shape than even many bears think.
My two brokers have had Linn Energy on a no-short list since 2008. It has nothing to do with the float. The Nasdaq site will let you know the units short and the float. Try a little research.
Considering that you have a magical view of the future, I hope you've sold in order to preserve some capital rather than continue to watch it decline.
What "oil price war"? Increasing supply and demand reduction do not a war make. It's just simple economics. And while I don't want disturb the sleep of the deeply uninformed, you might take a gander at Linn's balance sheet and try to learn about the cost of debt. It may hurt your brain, but it shouldn't cause permanent damage.