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"We reiterate Sell," says Hedgeye's Kevin Kaiser, responding to the Goldman upgrade of Linn...

"We reiterate Sell," says Hedgeye's Kevin Kaiser, responding to the Goldman upgrade of Linn Energy (LINE) and LinnCo (LNCO). "Maintenance capex is understated by $150M per quarter - nearly 100% of distribution ... Derivatives accounting method generated 29% of DCF in Q1. Concerns are not overdone."
Comments (45)
  • Wow they got defensive fast.
    17 Jul 2013, 07:34 AM Reply Like
  • if my memory serves me right. which it may not. I recall someone had a huge, million dollar short option for august??? like I said I am sketchy on this one. anyone remember??
    17 Jul 2013, 04:19 PM Reply Like
  • Yeah, I think if LINE is below 31 by the august expiration then the bet makes money.(could be 31.50, but its around that value).


    But for the most part, many shorts already made a lot of money, and the suckers are the ones that sold when Jim cramer said to sell.... after he said to buy......
    17 Jul 2013, 07:52 PM Reply Like
  • Why do they feel the need to keep saying that?
    17 Jul 2013, 07:49 AM Reply Like
  • If they say it long enough, someone might believe them and toss in their chips.
    17 Jul 2013, 07:58 AM Reply Like
  • EPS ? Golden touch ? a wait see.
    17 Jul 2013, 07:57 AM Reply Like
  • If you tell the big lie often enough, people will start to believe you.
    17 Jul 2013, 07:57 AM Reply Like
  • That tactic is used far too often. Often by people we are supposed to trust.
    17 Jul 2013, 09:55 AM Reply Like
  • Who is this Kevin Kaiser anyway? My suggestion is to ignore Hedgeye, and Barrons until something clear develops out of all of this. These guys are definitely on a witch hunt, shorting the stock, and trying to scare the wits out of investors.


    Goldman dishes out a BUY on the stock, and these bandits jump right in on sell. As a investor, ask yourself why are they so concerned? Hmm, believe some guy I have never heard of, or a more respected firm like Goldman. I'll take the latter thanks. Hedgeye and their goons, can take a hike for I all I care.
    17 Jul 2013, 07:57 AM Reply Like
  • go-4-it:
    In response to your question as to Kevin Kaiser, my understanding is that he is a 25 year old in his first job with a small New Haven firm of no particular repute. Why people pay attention to him and disregard market pros like Leon Cooperman (who has $220 million invested in Linn) and the Merrill Lynch MLP analyst, Gabe Moreen, is beyond any rational understanding.
    Elliot Miller
    17 Jul 2013, 10:42 AM Reply Like
  • The reason this happens is there are people who read this and without any further study or reading will dump their shares. These guys stamp sucker on the sellers forehead and take their money shorting the stock.


    These are the same people that bash Cramer or any other stock picker that makes a recommendation. They buy without doing any kind of investigating or homework on the stock. Then lose money and blame the other guy.
    17 Jul 2013, 10:56 AM Reply Like
  • thanks Elliot for the update. Yep. SOME of these kids today, think they know it all. Give them an avenue to spew junk, and they seem to know everything. I witness kids like that everyday in my own job. New hires with a degree, and an "entitlement" badge stamped on their foreheads.
    17 Jul 2013, 11:29 AM Reply Like
  • Have to agree, no statement on their ownership.
    17 Jul 2013, 11:35 AM Reply Like
  • Goldman's not the only one. Merrill's recent analysis was positive and Cooperman's article was very clearly positive.
    17 Jul 2013, 04:51 PM Reply Like
  • Did you read their report?
    17 Jul 2013, 07:37 PM Reply Like
  • I think Kev should be spanked and sent to bed with no supper.It's one thing to make an honest mistake or to disagree over a point. But to keep trumpting a disproved point for personal gain is just plain wrong. Unfortunately it is probably not illegal. Let's just hope he costs the shorts so much money that we never hear from these folks again.
    17 Jul 2013, 08:51 PM Reply Like
  • Kevin (Francis) Kaiser is a Princeton Grad (Go Tigers), with a major in Economics, born Jan 5, 1987 and a pretty good hockey player. He has a co-published recommendation on a bunch of oil stocks in 2010, which would have been relatively soon after his graduation from Princeton, The other writer was on the staff of the same firm Kevin is currently at. There is really not much history on him. However I expect that the strategy and execution related to Oil and Gas futures at Linn is pretty durn complicated, and I suspect Kevin does not have the experience to really check it out.
    However I respect Barrons, so I would go lightly with respect to LINE. At the same time, tarring BBEP with the same brush by the market was wrong, wrong wrong. In view of full disclosure, I am long BBEP, though I sold a bunch to take some short-term profits, but am keeping a stake because their management (Stanford MBA and HBS) are really good.
    19 Jul 2013, 09:41 PM Reply Like
  • I will take GS over Hedgeye any day of the week. H is a discredited source for anything to do with LINE. The SEC should be investigating whether there is Bear pricing collusion.
    17 Jul 2013, 07:59 AM Reply Like
  • Bear pricing collusion? Let me ask you one thing:
    bullish call= research, bearish call= bear raid?
    17 Jul 2013, 07:51 PM Reply Like
  • Kaiser is a recent accounting graduate with no experience other than at Hedgeye. They ought to be defensive.
    17 Jul 2013, 08:01 AM Reply Like
  • If Kaiser is an accounting grad, someone needs to teach him accounting. He doesn't seem to understand how hedging costs and maint cap ex are handled.
    17 Jul 2013, 09:52 AM Reply Like
  • As I have written before, I fail to see the problem with carrying their derivatives portfolio at market each balance sheet date with the mark to market going thru the p/l. It is actually the most conservative accounting to reflect the asset / liability values at market and by taking the adjustment to earnings, reflects the market economics of the position. Not something a 25 year old with no experience would likely know.
    17 Jul 2013, 06:51 PM Reply Like
  • 7:27 AM Linn Energy (LINE) and LinnCo (LNCO) are upgraded to Buy at Goldman Sachs which believes the concerns over hedge accounting and maintenance capex are overdone. "We view the sharp sell-off since early July as an attractive entry point to own a quality MLP with highly hedged cash flows. a solid production base, and multiple options for growth." LINE +4% premarket (no action in LNCO).
    17 Jul 2013, 08:11 AM Reply Like
  • Do you think Hedgeye would ever say buy on something they said sell, they can't or it would prove they are useless.
    17 Jul 2013, 08:15 AM Reply Like
  • Actually they can do that. They were bearish on JCP (rightfully so) and they turned modestly bullish on it when the street was throwing in the towel.
    17 Jul 2013, 08:53 AM Reply Like
  • Hedgeye does some class act research! they don't take things lightly. They are the first one to admit they are wrong when they are, if they feel they are right they don't change their course. I've been following them for many years and I can say they do an awesome job.
    17 Jul 2013, 08:57 AM Reply Like
  • Tutt,
    Can u provide the community with examples of their previous research. ?
    17 Jul 2013, 01:32 PM Reply Like
  • I can't cause I would breach their client customer relationship. If you want ask them for some samples. What you can do is go on their website and check it out. They have a portfolio window where they update trades they do real time and you can download their trade history. All I can say is that they do a great job but most importantly since they are not seeking commission dollars they are not so compromised as Wall Street, cause in the end Wall Street gets paid on commission, they don't.
    17 Jul 2013, 07:45 PM Reply Like
  • tutt,


    Sorry I have a very different opinion of hedgeeye, They are not the organization you wish to portray here
    17 Jul 2013, 09:33 PM Reply Like
  • I understand, but is it supported by facts? For instance they have been bearish on LINE, LNCO since March 2013. Nobody gave a damn back then, not the longs got crushed they are the bad guys. Also check out their website every trade they make is time stamped. They have a pretty good hit ratio. At least they are transparent and you can call them out on trades that worked or didn't work..
    See it for yourself.
    19 Jul 2013, 09:27 AM Reply Like
  • Hedgeye May 2010 "sell all stocks now "


    Hedgeye July 2011 speaking about europe at the time - "the U S collapse will follow.


    Given that track record & Plenty of others like that , I choose not to follow that kind of advice -


    Therefore look at their position on LINE , using the same glasses.
    19 Jul 2013, 09:36 AM Reply Like
  • I guess if someone questions there motives they get a little defensive!! Maybe they want everyone to sell there shares so these so called professionals can buy the stock on the cheep!! I trust advisers about as much as I trust our Government!!
    17 Jul 2013, 09:20 AM Reply Like
  • "When I said sell", added Mr. Kaiser, "I meant sell to us at fire-sale prices. I need a new Rolex".
    17 Jul 2013, 09:26 AM Reply Like
  • Well hopefully, Hedgeye will need to change its name to Blackeye after the truth is bourne about $LNCO and $LINE, that they are a-ok.
    17 Jul 2013, 09:54 AM Reply Like
  • Hmmm. Goldman or Hedgeye? Gee, hard decision, huh.
    17 Jul 2013, 09:56 AM Reply Like
  • I am not defending hedgeeye to any degree but not sure that GS is the poster child for honest and diligent research....especially with their fingers in the underwriting, trading, and advising kitty...
    17 Jul 2013, 11:06 AM Reply Like
  • Correct; you can't be anything but skeptical about these WS Bankers' recommendations. GS is not a flagrant hyper/basher type like some of them, but advice they give for free has to be considered suspect.
    Hedgeye's quick, defensive reaction tells a story; maybe it is immaturity, but I suspect big money is involved. The odds are that they are exaggerating or misunderstanding the accounting, IMO.
    17 Jul 2013, 11:39 AM Reply Like
  • Kaiser should have used the word "ponzi" to make his article read with more credibility. I hope some of the shorts are starting to worry.
    17 Jul 2013, 11:07 AM Reply Like
  • If your a long term holder then you got to love LNCO hitting $32 today. I sure hope the shorts are feeling the squeeze.
    18 Jul 2013, 02:30 PM Reply Like
  • GS is the most credible of the sell-side upgrades for Linn. They tend to be more cautious than some banks when they put out "buy" recommendations. Also, it hard to believe they would wade into this cat fight if they hadn't done their numbers. As someone pointed out, however, they aren't exactly an independent voice.


    Kaiser/Hedgeye's nearly instantaneous defensive reaction is surprising. Hedgeye is hardly acting like the independent research house they claim to be--they're acting more like a market-maker. Kaiser's attitude is sort of "this is my game and I'm taking my ball home if you don't like it."


    This remains interesting.
    17 Jul 2013, 11:55 AM Reply Like
  • Believing someone that just received their accounting degree or believing a seasoned pro like Cooperman or a knowledgable firm like Goldman is no contest. It just makes you question Hedgeye's motives. Where is the SEC in all this?
    17 Jul 2013, 12:48 PM Reply Like
  • Kaiser sounds like the "Little Girl" who cried Wolf way too many times and because of his greed, he wants to make more $$$ in shorting Linn over and over again.
    17 Jul 2013, 12:49 PM Reply Like
  • Gentlemen.
    I'm long LINE July $28 CALL options. I want to capitalize on that 10% dividend paid by LINE if it is going to continue for the near term. Currently the stock is trading at approximately $27. Options expire Friday---Would you exercise the option?
    17 Jul 2013, 01:33 PM Reply Like
  • Absent inordinately high reserve impairments and operating efficiency deterioration, an incremental succession of accretive acquisitions can not, all of a sudden, become cumulatively dilutive, from additional debt and equity issuances that are, themselves, not dilutive of pro-forma value per unit.


    Those dynamics in Linn Energy's cash flows that some have thus mischaracterized as dilutive are actually, instead, depletive, an attribute of all depletable resource companies. And this depletive attribute gets further accentuated in an LLC or MLP precisely because they are designed to quickly return capital to unitholders, which shortens investment durations, decreasing risk profiles.


    Most analysts recognize this distinction between depletive and dilutive dynamics, while a few e.g. Hedgeye) confuse them, and this accounts for most, not all, differences of opinion between Linn's most recent short and long positions.
    17 Jul 2013, 03:59 PM Reply Like
  • Hedgeye borrowed $2.5 million dollars the first of this year from the State of CT to expand their 23 man operation to 120 by 2016. The money will not be paid back if Hedgeye can get to 120 employees.


    It is very clear that the failure of Linn Energy is critical to Hedgeye ability to get new subscribers to pay the $29.95 per month for their news service.


    It is looking more and more that Linn Energy is a very well managed company. Not so sure you can say the same about Hedgeye.
    19 Jul 2013, 11:03 PM Reply Like
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