You're right, Truffles. But even then Linn is on the cusp of bankruptcy unless it can magically head off a bleak future that's coming up pretty fast.
Not even a speculative opportunity this morning (or will there ever be one I suspect). The spread is insane. TDAmeritrade this morning checked 8 traders for me. The best buy-price I could get ( 7.75% of 2021)) was $3.57 for a mere 15 bonds. Any more jumped the cost by more than a buck. If I owned some and wanted to sell the highest offer was $1.88. There's simply no bargain at all in the bonds, LINE units, or LNCO shares. Just sure-thing losses for all who hold or buy now.
Ken, the rich and powerful have always been favored since the initiation of the U.S. Constitution . . . . And it's not likely to change. But I do enjoy my modest affluence too much to envy them.
The crybabies clearly irritate me also.
And Michael Lewis's "The Big Short" is a terrific read. I haven't seen the flick, but I doubt that it comes close to the entertainment value of the book. I read aloud umpteen parts of it to my long-suffering wife as I followed her around announcing, "Listen, listen! This part you've GOT to hear."
Nonsense. No one made you buy or fail to accurately assess Linn's balance sheet. Cite an instance of criminal fraud that's not simply imaginary. Destruction is an intimate part of capitalism.
The hedges aren't phony. They're just rapidly rolling off while Linn's debt remains increasingly unsupportable. Linn sees this as well as the market. The company has recognized that it's living on borrowed time and borrowed money. (By the way, a number of foreign banks are hedge counter-parties.) There may be a speculative play in the bonds but not the stock, which had its bounce to the mid 40-cent range on Friday. and then fizzled.
Harvy, what I wouldn't give for only a $10K loss when I bailed in the 23s. I posted why I sold, confessed my misguided hopes when LNCO blew through 30 (which is when I concluded that this goose was likely cooked but thick-headedly held on anyway), and was name-called for my continued bearishness all the way down to the single digits by a number of coarsely rude pumpers who have since taken a powder with nary a hint of having been nastily wrong. And, amazingly enough, there are still posters who think that Linn may yet recover without defaulting.
Meanwhile, Heebin, if you enjoy masochism, you should certainly buy more.
Linn will reorganize into a C-corp, cancelling all current stock and units, give X amount of shares to each holder of unsecured bonds, maintain current lien holders, and perhaps try to raise some cash via a really cheap equity sale. This is my best guess, anyway.
Stifel analyst Brian Brungardt, Jr., said: "While we previously viewed the partnership as being able to work through at least 2016 given the hedges in place and associated strong positive free cash flow, we see a growing likelihood the partnership may pursue the reorganization route.
"In light of hiring a financial advisor, maxing out the credit facility, and amending its change of control package, we view the partnership as increasingly pursuing the route of reorganization or sale of the partnership," according to Brungardt, who now says the stock is worth $0.
(The above is from a Benzinga article.)
My take is that senior and junior lien holders maintain their positions in a virtually sure-thing reorganization. LINE/LNCO holders get stiffed. Linn energy becomes a C-corp and LinnCo disappears. Holders of the so-called "senior" notes (actually debentures with zero collateral) are given shares in the reorganized Linn Energy, which now has considerably less debt and may even be viable. But how many shares and at what price per bond? . . . Who knows? Yesterday's prices for the 2020s varied wildly from around $1.50 to as high as over $4 on one trade. A gambler could try buying some of these unsecured notes for under $3.00 (which is $30 per $1,000 bond), hoping that shares in the new Linn compensate for the cost. But I wouldn't touch the doomed stock for anything more than a quick day-trade.
That was !2:04 PM E.S.T. Well, it's not bouncing as I'd thought and I sold for a teensy profit. I'll try again if the high .20s beckon. Seems that a lot of players are recognizing Linn's dire straits, and I don't want to keep watching it.
Sorry you took a bath, Bear. It's always tough to sell at a loss in order to preserve capital. Then things get worse and we tend to still hang in when we shouldn't. I've done it with two different biotechs to devastating effect. That was several years back and they still cause me pain.
Ford went down to a buck, Ken, in 2008 even though they had money and adequate sales to ward off a BK. Linn certainly isn't in a parallel situation. And the finances have been practically telegraphing the company's demise since the 2014, Q4 CC. So while I think that there have been many day-trading opportunities over the past year (including early today when I bought the pre-market panic at .34 and sold a bit later at .4575), I don't believe at all that Linn is even a gambler's "helluva good opportunity" as an intermediate to longer-term hold. However, LINE/LNCO may provide a great shot for masochists to have some fun.
If Linn energy defaults, then LNCO shares are worth nothing and Linn's "senior" notes are likely in the same boat. But LNCO holders aren't beholden to the IRS as many LINE holders, especially if they collected distributions, will be.