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Linn Energy (LINE -0.8%) is downgraded to Reduce from Neutral with a $34 price target (from $38)...

Linn Energy (LINE -0.8%) is downgraded to Reduce from Neutral with a $34 price target (from $38) at Global Hunter after disappointing Q1 results. The firm is cautious given the reduced guidance, high decline rates, move away from the Hogshooter and general inability to drive growth in DCFPU despite massive development spending and acquisitions.
Comments (21)
  • Maybe the analysts at Global Hunter (?) should do some reading.
    Start with this you super-smart analysts:
    http://seekingalpha.co...
    Linn Energy does not deserve a downgrade and Global Hunter should not merit a Market Current for doing this.
    Who are the analysts that have not downgraded Linn?
    Let's be fair on this stuff, SA.
    26 Apr 2013, 01:06 PM Reply Like
  • I actually welcome questionable downgrades as an opportunity to increase my position in a strong company. Especially with the monthly distributions coming online.
    26 Apr 2013, 03:05 PM Reply Like
  • You got to Be Kidding. ! Linn Eng. doesn't deserve that.
    26 Apr 2013, 01:40 PM Reply Like
  • Love these downgrades on these excellent companies. That just provides a buying opportunity to add more shares at say a ~10% discount. Love these analysts. Maybe they do provide us a meaningful function.
    26 Apr 2013, 01:41 PM Reply Like
  • Whatever. It just means that we can buy more at a lower price and a higher dividend yield. Too many analysts still don't know how to evaluate MLP's like LINE.
    26 Apr 2013, 01:42 PM Reply Like
  • Hmmm....if I wasn't such an old coot I'd submit my resume for a position as an MLP analyst at Global Hunter!
    26 Apr 2013, 01:47 PM Reply Like
  • The analysis is foolish. These people apparently don't know anything about the industry, the winter weather this year, or about LINE.
    26 Apr 2013, 02:10 PM Reply Like
  • At $34 a share the dividend yield would be over 8%. Plus, starting in June, Line will pay dividends monthly.

     

    There will be a buying frenzy at anything under $36 due to the dividend yield.

     

    26 Apr 2013, 03:00 PM Reply Like
  • Actually, when the Berry acq is complete, the dividend at $34 would be a touch over 9%
    26 Apr 2013, 03:50 PM Reply Like
  • I somehow missed the announcement on monthly divs, but more importantly, to me, is does that apply to LNCO also? I own a ton of both, with LNCO in both my roth and regular account. It makes a huge difference to me in the roth, as I wouldn't have to wait for a quarterly div to accumulate a cash balance to buy something .I wish all MLP's would do this, as they are are grouped into the same month, or close, in paying. It creates an income bubble that does not necessarily come at a time I want to buy. It is really a problem in my main account, but it would help the roth more. I hope it starts a trend.

     

    As for the author, he is either a short seller or clueless. I guess some folks hate success and well run companies. I hope folks listen to him so that I can buy in at a bargain again.
    26 Apr 2013, 10:29 PM Reply Like
  • VNR started this trend...worth checking out if you don't already own it
    27 Apr 2013, 01:46 PM Reply Like
  • i worry when i read comments like these.
    26 Apr 2013, 03:28 PM Reply Like
  • Is Global Hunter any good at what they do?
    26 Apr 2013, 05:15 PM Reply Like
  • Never heard of them.

     

    Perhaps they have a BIG SHORT POSITION. Most of these organizations are liars and act in their own interest. Ignore them and do your own DD.
    26 Apr 2013, 08:49 PM Reply Like
  • Who is Global Hunter? Never heard of them before.
    26 Apr 2013, 08:50 PM Reply Like
  • Global Hunter is a LLC in several businesses.

     

    They go under different names. At one time, they were involved in Velocity trading, Evelocity, and Madison Investment. They have a FX business, work with CME members and do investment banking in the energy and mining industry.

     

    Right now, they put on investor education programs where you meet the executive of various energy or gold companies. No need in me telling you that Line's executives have not shown up to any of their recent events. I would be happy to hear from Global Hunter if I'm wrong.
    28 Apr 2013, 08:31 PM Reply Like
  • I think we need to pay attention. This does concern me:

     

    "general inability to drive growth in DCFPU despite massive development spending and acquisitions. "

     

    I view the 1st quarter's result as seasonal, not a big deal. But, LINE's growth is all fueled by external financing, not from earnings. Adjusted EBITDA and DCF are cash flow measures, not earnings/profit measures. LINE lost money this quarter on an adjusted GAAP basis. Not a big deal for the quarter, but overall it isn't generating significant earnings (different than cash flow). I am told such is the nature of MLPs. All I know is that, over the long term, if you don't have earnings you got nada. You have to look at cash flow and earnings, not just cash flow. Earnings pays down debt. When is the last time LINE referenced their earnings in their conference call? (Real GAAP earnings adjusted for unrealized gains/losses) Still long LINE, though I sold half my position at just above $39. May buy more if it dips to $34. Still the lack of earnings, despite the huge growth, concerns me.
    26 Apr 2013, 10:11 PM Reply Like
  • Sorry, but you pay down debt with cash, not with earnings

     

    Be careful about trading MLP's, every time you sell you are subjected to recapture....
    27 Apr 2013, 01:49 PM Reply Like
  • The sources of the cash are significant. Only cash from earnings increases your net worth, is what I am saying. Cash from debt or equity profits you nothing.

     

    You borrow $100, and pay back $100 in debt:

     

    Borrow the money:
    Debit: Cash $100
    Credit: Liability $100

     

    Pay back debt:
    Debit Liability $100
    Credit Cash $100

     

    IT's a wash. You have not paid down any debt and your net worth is the same.

     

    You use equity to pay down debt:

     

    Equity issue:
    Debit Cash $100
    Credit Equity $100

     

    Pay back Debt:
    Debit Liability $100
    Credit Cash $100

     

    Assets = Liabilities + Equity. Equity is increased $100, Liabilities are decreased $100. The company is in better fiscal shape, you have $100 more in equity, however it came from an owner contribution. Pay the owner back for that contribution and your Net Worth is still the same as before you paid down debt. Again, you are no better off than before paying down the debt. After paying back the contribution, Equity is the same as it was before paying down the debt.

     

    Earn $100 in profit, not from operations or adjusted EBITDA or EBITDA, but Net Income after all expenses. Then pay down debt:

     

    Since you've earned $100, assets are $100 greater, as is Equity.

     

    Pay down debt:
    Debit Liability $100
    Credit Cash $100

     

    Your assets are now the same as before paying the debt, your liabilities are $100 less, and your Equity is increased $100. Your Net Worth has increased from earnings. IT does not increase when the source of cash comes from debt or equity. That's what I was trying to say.

     

    Cash flow that will benefit you comes from earnings. Adjusted EBITDA and EBITDA are not Net Income or earnings because they don't include some actual cash costs/expenses, namely interest, depreciation, amortization, and taxes. They are supposed to represent cash flow, but not earnings.

     

    "All I know is that, over the long term, if you don't have earnings you got nada."
    27 Apr 2013, 08:19 PM Reply Like
  • Granted it is an MLP, so they are distributing as much of the earnings and cash flow as they can back to unitholders. Still, the inability to grow earnings is a concern to me. That will show up in DCF over time.
    27 Apr 2013, 08:56 PM Reply Like
  • Global Hunter was fined $150,000 by the FINRA for a presentation that was not fair and balanced.... Oops...

     

    One has to wonder if the same is true here.
    6 May 2013, 08:24 PM Reply Like
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