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Casey Hoerth

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  • Linn Energy: Many Ponzi-Like MLP Blow-Ups To Follow [View article]
    Woah, OK well I'll do my best to answer those five...

    1) Different business model. For one, MLPs don't pay corporate taxes, which allows them to distribute a lot more cash. For two, MLPs don't have exploration budgets. That all gets distributed. For three, they don't have to drill as much. Linn drills, but probably nowhere near as much as the E&Ps. This all adds up.

    2) Same answer.

    3) Linn hedges 100% of its production. Yes, the hedging does reduce cashflow to equity. Yes, it does reduce distributions. Over the course of its life, Linn has taken out $12 billion in debt and equity. 10 was for acquisitions. I believe only $1 billion was for financing puts. (Just waking up and taking these numbers off the top of my head, here...)

    4) Linn is taking out lots of debt to acquire other companies. The reason is because there is a LOT of mature assets to acquire. The shale revolution has caused major oil companies to jump into the shale and sell their mature assets to finance it. When the acquisitions become unprofitable due to high debt or too much competition, I suspect the upstream MLPs will stop acquiring.

    5) Linn's reserve base decline is probably lower than that of most major E&P corporations. Mature assets decline in value less than new ones for the same reason a used car depreciates less than a new one. Look at these MLPs as used-car buyers. Well, maybe that's a bad metaphor at this moment, but it still works.
    Jul 5 09:45 AM | 43 Likes Like |Link to Comment
  • Observations From My Trip To China [View article]
    Anytime I hear a westerner talk about how great Chinese people's work ethic is I cringe. Admittedly, I stopped reading this article at that point. It seems a lot of smart people are still mystified by China. This line of thinking is usually accompanied by some line about "how hard they work compared to us." Double cringe.

    I'd never say Chinese people don't work hard. They do. But the westerner who stops at that clearly doesn't get it. Ever hear the old adage "work smarter, not harder?"

    Well, the Chinese do the exact opposite: "Work harder, not smarter. And most of all, don't get too much done: It might embarrass your peers and make you a target."

    In a Chinese workplace, the perception of suffering at work is often more important than actual results. That is not a healthy environment for productivity, and it goes a long way to explain why China has so few globally competitive name brands. Nobody else is willing to work under that management style.

    That's something "old China hands" in the West will never understand because they never had to be put in that painful position. Every time people like Tilson go to China, they're just pampered like a panda: Shuttled around from one metaphorical Potemkin village to the next. They'll never get what China's really all about because they've never felt the pain.

    Source: Worked there. And in Taiwan. And not for some western company.
    Nov 1 05:50 PM | 24 Likes Like |Link to Comment
  • Opportunity Knocks At Kinder Morgan [View article]
    I'm beginning to think that the negative articles from Andrew Bary and Kevin Kaiser might be some kind of Princeton fraternity joke.
    Mar 2 09:01 AM | 20 Likes Like |Link to Comment
  • A Deeper Look Into Seadrill's Debt [View article]
    Thanks mike3344,

    A sideways market is actually good for SDRL at this point. If only it could just stay sideways forever, not only will you get a nice dividend but also a chance to accumulate more.
    Mar 23 09:09 AM | 18 Likes Like |Link to Comment
  • Linn Energy For Dummies [View article]
    Well that's not very nice to say... I meant the DCF, if the premium paid for puts were subtracted, would not cover the $600 million. I might just reword it and submit a correction so it is more clear.
    Jul 21 01:21 PM | 17 Likes Like |Link to Comment
  • Sense And Nonsense About Climate Change. What Do Investors Need To Know? [View article]
    Interesting stuff. Author had me until "Objectively, anthropogenic climate change is virtually settled science."
    Jan 9 01:17 AM | 17 Likes Like |Link to Comment
  • Linn Energy: The Worst May Be Over [View article]
    Hi Chancer, I think I saw your comments on Linn on other articles with a similar tone. I'm not thrilled with the amendment either but many of us saw it coming.

    Linn is paying 34% more because LNCO stock has tanked and the acquisition wasn't going to go through at that price. That Linn has to dilute more is unfortunate. But I understand why Linn is so eager to close this one. 1) This merger will give Linn a big competitive advantage over other MLPs as it has big positions in the most profitable geographies in the country and 2) Linn is eager to do this because California and the Permian will offer the most upside from enhanced recovery, and the Permian should yield a lot of unconventional opportunities, all of which is in addition to what Berry is doing there now.

    Management is doing this with the long-term in mind. The US is leading the way with shale oil. In fact, everyone else is too bureaucratic, green or control-obsessed to even get started. As long as we keep using oil over the next 30 years, we'll look back at this deal and understand why Linn was so insistent on adding Permian acreage.
    Nov 7 07:49 PM | 15 Likes Like |Link to Comment
  • Linn Energy: How Low Can It Go? [View article]
    Thanks Ashraf,

    This SEC filing doesn't really change the thesis of what my article, but it does add a lot of uncertainty. This is the mother of all battleground stocks and it looks like the shorts won this particular round.

    Personally, I've done my homework on this stock and don't think the SEC is going to find anything substantive here. This company has been nothing if not transparent on how they do business.
    Jul 2 03:14 PM | 15 Likes Like |Link to Comment
  • Seadrill: How High? [View article]
    恩。 你非常挑剔。
    May 30 10:45 AM | 14 Likes Like |Link to Comment
  • Seadrill: Was That The Bottom? [View article]
    I've actually found plenty of 'too good to be true' moments since 2008. Back in 2009, basically all the blue chip dividend growers were yielding over 4%. McDonald's at $55 was indeed too good to be true. Some of the frac sand providers last summer were 'too good to be true.' Linn Energy down at $22 felt too good to be true. ConocoPhillips back at the time of the split, with an awesome 5% yield felt too good to be true. I remember in 2009 when Kinder Morgan Partners yielded 10%. That seemed too good to be true. There are a lot of moments in investing where things seem too good to be true, but I've learned that one needs to just do their homework. And, having done that, ignore the butterflies in one's stomach.
    Apr 27 01:49 PM | 14 Likes Like |Link to Comment
  • Use Ensco To Build Dividend Income [View article]
    Irregardlessly I think it was a good comment.
    Apr 6 11:20 AM | 13 Likes Like |Link to Comment
  • Opportunity Knocks At Kinder Morgan [View article]
    Thanks Scooter-Pop

    If anything I would imagine that the events in Ukraine would lead to commodity spikes. In any case, I also added more KMP to my family's account.
    Mar 2 09:00 AM | 13 Likes Like |Link to Comment
  • Seadrill: How High? [View article]
    Exactly. It's not the first nit-picky comment I've seen from this person. The personal attack was a cherry on top. It's just done in bad faith which is why I don't bother to respond. I'll just leave the comment up there, although I'm sure the SA Moderators would delete it if brought to their attention. It's amusing.
    May 30 09:17 AM | 12 Likes Like |Link to Comment
  • Kinder Morgan Energy Partners A Buy [View article]
    Is that a fair thing to say? I just read over my article. Twice. From what I can see I referred to cash payments made by KMP as distributions every time. Yes, FAST Graphs calls them dividends but that's just because it's a default for the software. Even then I make sure the reader understands that the pink line in FAST Graphs refers to distributions.

    I referred to KMI's payouts as dividends, but since it is the parent corporation, that would be correct. Even their investor presentation calls KMI's payout a dividend.
    Aug 1 09:04 PM | 12 Likes Like |Link to Comment
  • Linn Energy: Market Does Not Like The Quarterly Results [View article]
    Yeah. The white-collar ambulance chasers are a complete joke.
    Aug 8 09:02 PM | 11 Likes Like |Link to Comment