"Moody's downgrade of Linn Energy reflects the company's elevated financial leverage and high cost of capital, which limit its flexibility in the face of an external liquidity profile that is declining and a hedge book that will begin to roll off into materially lower commodity prices," commented Gretchen French, Moody's Vice President. "We positively note that LINE has taken a number of actions this year in response to the low price environment, including lowering and ultimately suspending its distribution, and focusing on reducing its debt burden. However, the lower CFR and negative outlook reflect the challenges the company faces in reaching sufficiently lower leverage levels prior to its hedge positions rolling off."
SD, try not to obsess about the toll the unit price is taking. This selling will ultimately dry up as the major income investors exit and are replaced by risk-takers who'll bet on an oil comeback and a big capital gain in LINE/LNCO. They'll be growth-oriented and will look to double or triple their money. Be patient and see if you can wean yourself from following the unit price too closely. Linn has a decent shot at clawing itself back to double (or more) what it is now. But you'll have to give it more time than you'd like. Make a list of the good things in your life and set those against the Linn Energy plunge. Think about what's more important. Don't lose your perspective.
I think that the CEO has certainly been weak and have posted as such, with reasons, for about three years now. But your semi-coherent post is borderline nuts.
First, Linn needs the money to buy in debt.. Second, the notes maturing in 2020 are now about $.61. Keep in mind that they have first call on assets should there be a bankruptcy. So the note price will be disengaged from the unit price, which are worth nothing in BK, while the 2020s could bring $.45 on the dollar depending on asset sales by a receiver. The 2020s are currently paying about 15% annually, so if you think, say, that Linn goes bankrupt in two years (though I don't think so) you'd receive about $183 per bond in annual interest plus $450 per bond (my guess, of course) from asset sales for a total of about $630 for each of today's $610 note. That's a wash, but, in effect, a financial safety net of sorts completely lacking in the units. The upshot is that the unit holders are debtors and the note holders are the creditors. (For those not sure, "note" and "bond" designations refer merely to length of maturity.)
I don't believe we're seeing panic selling. We're seeing selling by people whose reason for buying Linn Energy was its income. With low oil prices and Linn's driving need to reduce its high debt, the postponement for any gradual income revival could be years. So income holders, probably still in the many millions, have no reason to stick around. Someone with, say, 20K in units can still harvest more than $60K at the current low price, which is certainly better than $40K. Thus the selling. (I've been negative on this company since the Q3, 2014 CC, when they forecast a huge Q4 loss, a bit less than half of that for one-time transaction costs while the remainder, more than $50 mil, went entirely unexplained. And the Q4 hedges were great. That was opacity, not transparency. My distrust of management soared, so I bailed. Still, I admit that I never anticipated a price this low. I had thought 7 or 8 at the worst. But with no dist. the sellers are clearly in charge. I think that any near-term bounce up will be purely technical and short-lived. . . . And I'm not short and no longer own puts.)
This is the internet, Michelle. You've got to check primary sources as (1) numerous posters simply consult their imaginations for news, and (2) lots of other posters basically don't know what they're talking about, nor do they care to make the research effort to correct some of that.
"Lots of Buying"? Enough buying like this and the units will hit zero in a week. Also, you're actually inquiring of Yahoo posters if the units have hit bottom. Actually, I've engaged my psychic powers and know the precise number, but I can't share it before receiving Donald Trump's approval.
Why would anyone buy $10 billion in debt for less than $5 billion in equity for even $1 per unit? (.But If you think that's a good deal, I've got a bunch of $10 bills I'll sell you for only 20 bucks apiece. A bargain.)
Still waiting to hear you name the brokerage where you've been shorting. Surely you're not a blatant liar. . . . Then again . . .
Management controls the board. As with the vast majority of American corporations, the board isn't chosen and paid by management to be anything but rubber stamps. If Linn's board were objectively independent, the distribution would have been eliminated well before Linn descended to crisis mode.
Cool wrote: ". . . to scoop up depressed energy assets on the cheap." First, those are essentially assets for Blackstone and Quantum that Linn will manage and receive a very small portion of the revenue until about 5 years hence. Second, in the CC Linn said that they're having a difficult time finding appropriate energy assets that are cheap. Of course nothing may be cheap enough when oil is below 50 bucks. So Linn's best bet, I think, is to use cash flow while their hedges are good and continue buying discounted credit, which is as good as extra profit considering their debt burden..
Your name-calling, Bjosh, shows considerable intellectual confidence. Your civility and reasoned thought do the board credit.