Mr Wuss wrote. ". . . I don't have to pay into the entire Obama care BS." Australia, a socialist country, has had universal health care for all since 1984, and that includes dental services and prescriptions. And, as with England, a relatively small number of optional private services and hospitals are available. Also, the large majority of workers in the country are govt. employees compared to the much smaller number who work for private enterprises. Banks are govt. run among many other things. (The govt. even controls housing prices.) In fact, the U.S., a country that Mr. W. seems to despise, is the least socialist of any industrialized country in the world. Life does tend to be simpler when you don't know much.
So leave, Alfred. Don't just be a wuss and say you're *ready* when you're really not ready at all despite your contempt for the country you live in.
Hey BB. What brokerage would allow you to short Linn? And I mean when it was above $5, let alone at $5. (Whenever I ask this from folks who claim to have shorted LINE or LNCO I never receive a response.)
Gainvests, buying Linn bonds (they're really just debentures) is a baffling proposition. First, you need to assume the likelihood that Linn will be going under. So first call on the assets is the $3.5 billion owed to banks. They won't care if the assets command fire-sale prices as long as prices, even if barely so, are high enough for a return of their loan money. What's left will probably result in either asset sales to be divvied up pro-rata to bond holders or, if there's enough to form a new, coherent small company, an undetermined amount of equity in a fresh but highly diminished enterprise, although one without debt. How to objectively assess the actual value of the bonds in a Linn BK is the challenge. (And you can't be confident that a couple of years of bond interest is assured. I'd figure on a year's worth to be conservative. Credit for ongoing operations could be a really big problem for Linn, and I believe that's what the stock price is reflecting.)
No, Moneyman, they lack the resources and need to conserve cash for operating needs. If they were not under increasing financial constraints, the bonds wouldn't be at such a highly discounted price. That's the irony of it all. ( Of course, the current CEO did think that the Hog Shooter fiasco and other failed strategies were also no-brainers.)
Nice little opportunity yesterday. Passed by my computer and saw the bid on Level II click to 147,000 units against about 10K on the sell side. Wow! I hadn't intended to trade, but that was stunning. So I bought 5K in units at 2.81 and watched LINE move up about a cent every minute or so along with the giant bid, which at one point was over 200K. I placed an invisible sell order for 2.94 and returned to my bathroom painting. The units sold, dropped some and then at the trading day's end were at 2.97 on the ask. That looked strong, so I bought 5K again for the 2.97 and sold at today's pre-market for 3.09. A fun way to start Friday.
Topcard, it's quite possible to be a longer-term bear on LINE and day-trade its moves for upside action. Moreover, there's no rule book that states you can't take an interest in a stock unless you lay down money on it. And there are longs who now hate the company but somehow held on because of misguided hope. Their bad judgment isn't hypocrisy.
What matters is the validity of posters' arguments. Are they grounded in reality or imagination?
Finally, this is a Yahoo! discussion board, not exactly a financially astute neighborhood. It's an entertainment center where most people try to convince each other that they haven't made a mistake. So confirmation bias runs rampant and platoons of posters brook no disagreement.
Topcard, while Linn is reasonably well hedged in oil (their high-margin product) for 2015, they're only around 2/3 hedged for 2016, and not at all in NGLs. Excellent hedges in NG through 2017, but small profits in that product, at least compared to the more than 1/2 billion dollars they need annually to service their implacable debt. And oil in 2017 is barely hedged at all. Considering the 2017 futures prices available for oil, Linn just can't produce adequate cash flow with those discouraging numbers. So it seems to me that there's really not much point in hedging oil at this time for 2017 (less than a year and a half away) and beyond. Linn needs at least $75 oil (and they're not alone) to survive. And they need it pretty fast. But lots of things going on in the world are saying that's not going to happen. You need to accept that you've made a longshot bet and might do well if you're lucky and the gamble pays off.
Susan you're ignoring the carrying charges for the hedges which drop the price actually received for delivered oil. These costs increase the farther out you buy. (And there could also be margin costs as well.) The upshot is that the current price of Sept., 2017 puts is $53.42. Pretty weak in light of Linn's huge debt.) After charges that reduces to an actual $46 or so, which is only a buck different from today's spot price and way too low for Linn to rescue itself with. Moreover, you're not factoring in a bleak credit picture, which means Linn needs to conserve cash for operations and not go blithely buying discounted bonds. Otherwise they'll become insolvent in a hurry. As I've been stating for many months (since Linn was in the mid-teens) Linn is too risky for anything but very short-term trading.
Sentiment: Strong Sell
Centeuri, after I sold in the 49s, I *almost* bought back at about 36, but, luckily, common sense prevailed. The bond market isn't kind to speculators, and the spreads (at TD Ameritrade anyway) are way too wide for short-term trading. So I am totally out of the bonds as they're clearly messaging worse news to follow bad news, Linn being a seriously wounded company and running out of both time and recourse. (Right now the latest trades are at 28 and a little below for a total yield of 50%. Holy cow! If that isn't a clanging alarm bell, I don't know what is, yet the naïve players will consider it a great opportunity.)
Centeuri, several weeks back I posted that I bailed on the 2020s in the 49s with an avg. buy-in at around 56. I had only 35 bonds, but that still wasn't a fun trade (although I did pick up some small amount of interest). At 3:24 PM today a customer sold 15 bonds to a dealer for 29.75, not including commission to the middleman broker. Yikes!
Yandt, I certainly agree that there will be some value in owning the debt. My preference, as I've stated before, is for the 2020s. Still, it's too soon, I think, to buy the bonds for a longer-term hold. Granted they're both an income vehicle and provide some degree of safety as call on assets or, quite possibly, equity in a new, debt-free company. (With Linn's debt and concentration of mature wells, no one's going to be buying out the whole company.) However, I wouldn't jump in just now, despite the availability of bonds at around 34. I'd wait until there's more info. about oil shipments from Iran and to see if Iraq will ramp up production in response. Moreover, there's the next earnings report and CC coming up, which could have an impact, and the odds, I'd guess, lean toward the negative. The bonds could well go to the low 20s or even worse. (I've seen it happen with a couple of companies I bought into.) Would I buy back if the 2020s hit the low 20s? Dunno yet.