Generally pros don't trade with stops - they are watching their positions at all times and making a judgement as to whether a downdraft in price is justified or not and then trade accordingly. Stops are for less attentive investors and simply lock in a loss whether the price drop is justified or not. Recall the "flash crash" which burned many individual investors in the transient unjustified price drop with return to usual prices a few hours later and only ashes for those stopped out. Short sellers also are quite aware of somnolent investors with their dormant stops and accordingly, judge they may be able to start the avalanche with a small push that activates the stops. It should also be noted that a stop will not guarantee a given price - the stop simply orders that the equity be sold below a given price which in a severe downdraft (such as the "flash crash") may be well below the stop price. Use stops with care and better yet, stay closely tuned in.
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron'slong-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Shorts trying to induce a lemming run sale over the cliff and thus possibly block the Berry merger leading to further downside and more success for their financial manipulations. Very difficult to respect their chicanery. If the shorts are successful in blocking the merger they will walk away with their blood money and Linn will be ill for a while. One can only hope that the Berry holders see this market price lowering for the financial manipulation that it is and that once the merger is completed, the dividend increases, and the shorts pull out that the stock prices of LINE/LNCO will quickly rebound.
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron'slong-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron'slong-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Subscriptions to Elliott Gue and Roger Conrad's new Energy and Income Report, as well as MLP profits provide a positive and professional view of the financials - both rate LINE/LNCO Buy despite the short attacks. Insider buying at high levels also suggests solidity. Lots of uninformed amateur analysis out there - make your best informed decision...
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron'slong-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Have to trust management - same worries 5 years ago. If you have a better place to invest then go there.
Today's volatility in Linn Energy (LINE -2.3%) and LinnCo (LNCO -2.3%) apparently is traced to a notice of effectiveness from the SEC over the proposed takeover of Berry Petroleum (BRY -2.4%). RBC analyst John Ragozzino says he has a "high degree" of conviction the deal still will close, though it could be delayed to mid-July. [View news story]
Ragozzino also noted: "The worst case outcome, however, is that the deal will be delayed until around mid-July, versus the initial target date of July 1, the analyst contended. Ragozzino believes that Linn's decline today is unwarranted, and that the decline has created an attractive buying opportunity".
RBC Capital analyst that posted the SEC comments also posted: "The worst case outcome, however, is that the deal will be delayed until around mid-July, versus the initial target date of July 1, the analyst contended. Ragozzino believes that Linn's decline today is unwarranted, and that the decline has created an attractive buying opportunity." I agree.
Occurring in a setting of a seemingly cyclic MLP sell off though exaggerated with LINE. Higher interest rates on government bonds are thought to be pressuring yield stocks as well and with recent institutional ownership of MLPs there will be more myopic volatility. For me, a buying opportunity to secure a decent yield which my research suggests is relatively safe.
Use Linn Energy To Build Income Now [View article]
Keeping the MLP until it becomes part of your estate is the best option as the value resets and no tax is owed by your inheritors if sold immediately. However, even if sold by you, postponing taxation also has the advantage of capturing the "time value" of money which is not insignificant. As there seems always to be a fair amount of confusion regarding MLP taxation principles I suggest a visit to the National Association of Publicly Traded Partnerships http://bit.ly/yb1qPX. And of course there is LNCO for those allergic to complexity...
Use Linn Energy To Build Income Now [View article]
There is no risk free lunch anywhere. Pipelines will eventually be built to equal capacity and these companies will then need to struggle to grow. E & P companies will continue to acquire/find assets and develop them to sustain their growth just as McDonald's will develop new menus and GE will improve their jet engines to stay competitive. Life and the market as a reflection is striving amid competition, accompanied by risk, with those who plan and execute best most often winning. So far the management of LINE has planned and executed quite well.
Use Linn Energy To Build Income Now [View article]
As is usually the case it condenses to the matter of whom do you trust? I choose LINE management with recognized external supporting experts such as Elliott Gue http://seekingalpha.co.... Pays your money and takes your choice...
Linn Energy (LINE) -5.1% premarket after a weekend Barron's article warns of a sharp drop if the dividend gets cut. LINE's 7.5% dividend yield has supported the company's high unit price even as its fundamentals have faded; in Q1, LINE failed to produce enough cash to cover its distribution, even by its generous measure of distributable cash flow. LNCO -6.8% premarket. [View news story]
I think the smoke in this instance is being generated by a fire extinguisher salesman....
Linn Energy (LINE) -5.1% premarket after a weekend Barron's article warns of a sharp drop if the dividend gets cut. LINE's 7.5% dividend yield has supported the company's high unit price even as its fundamentals have faded; in Q1, LINE failed to produce enough cash to cover its distribution, even by its generous measure of distributable cash flow. LNCO -6.8% premarket. [View news story]
Of interest is the following email sent to Barron's in response to the renewed attack on LINE/LNCO by the same author. "
To the Editor:
Is Andrew Bary in the pocket of the Linn shorts? Does anybody at Barron's edit his work before it is published? Here are some reasons why, in my opinion, the answers to these questions seem to be, respectively, yes and no.
Mr. Bary's latest specious smear piece on Linn ("Twilight of a Stock Market Darling, May 6, 2013) raises many questions about whether Mr. Bary--and, indeed, Barron's--ought to be viewed as credible. Here are a few:
1. Mr Bary starts his article by saying that Linn's units "may" be worth less than the market price. To say that the units "may" be overvalued is to say nothing at all. They also "may" be worth more than the market price.
2. But that lapse in logic pales by comparison to that contained in Mr. Bary's next paragraph. Apparently disappointed that his prior attack on Linn didn't cause the collapse of its unit price, Mr. Bary actually attributes Linn's unit price sustainability to the claim that Linn's investor base mistakenly believe that Linn is a midstream, rather than an upstream, MLP. That allegation is obviously unsubstantiated and patently incapable of substantiation. By the way, in my experience and from reading relevant comments on Seeking Alpha, Linn's investor base appears more sophisticated than Mr Bary or his editors.
3. Mr. Bary also sees dire consequences because in one quarter with serious winter weather problems incurred by many exploration and production companies, not just Linn, distributable cash flow was less than its distribution, although its annual distributions (including the contemplated increase in Linn's distribution) is projected to be more than covered by distributable cash flow. There are scores of MLPs which often have a quarter in which exogenous events cause distributable cash flow to fall below their quarterly distributions only to have the distribution covered annually.
4. Mr. Bary next attacks Linn's production, but look carefully at how he does so. Because of the winter weather issues Linn's first quarter production was 796 mmcf/d, which Mr. Bary trumpets was "down" from the 800 mmcf/d in the 4th quarter of 2012. The difference between the 800 mmcf/d in the 4th quarter of 2012 and the 796 mmcf/d in the storm ridden first quarter of 2013 is so small and the result of the inclement weather that it hardly seems the making of a trend, much less a disaster. Yet when comparing the 796 mmcf/d in that first quarter with the 782 mmcf/d in the third quarter of 2012 Mr. Bary says that this improvement (which is more than 300% greater than the miniscule shortfall in the stormy first quarter)is "little changed".
5. Mr. Bary then points out that under GAAP accounting Linn habitually loses money. But so do many--if not the vast majority of-- -MLPs. Nobody who is a serious MLP investor looks at the GAAP earning of limited partnerships. For upstream companies like Linn, GAAP accounting is distorted by heavy depletion and intangible drilling cost write-offs. Mr. Bary ignores these inconvenient facts. In fact he never even mentions the words "depletion" or "intangible drilling costs".
6. Mr. Bary then re-visits the derivative accounting issues raised in his prior negative article, and once again he fails to note that Linn's accounting for distributable cash flow is based upon the very same rules required by the Financial Accounting Standards Board in accounting for derivatives for GAAP earning purposes. This is a meaningful omission.
7. Mr. Bary relies for his thesis on hedge fund analysts and principals quoted in the article. Another serious omission is a disclosure of whether these sources are or have been short Linn and, if so, the extent of their short position. It is hard to give much weight to the Hedgeye allegation that Linn, which has a $2.90 distribution even before its contemplated increase post- Berry acquisition, is only worth between $5.48 and $18.17 and a likely inference is that Hedgeye or its clients have a short position in Linn.
8. Finally, it makes little sense for Mr. Bary to compare Linn to the major integrated slower-growth companies such as Exxon Mobil and Chevron or even to exploration and production companies such as Newfield or Devon. Linn, as an LLC considered for income tax purposes as an MLP, is not a taxable entity. Pass-through entities such as MLPs have a lower cost of capital than C corporations. Linn's distributions to unit holders are tax deferred. Linn's yield has been consistently orders of magnitude higher than the C corporations to which Mr. Bary and his hedge fund sources compare it."
My principal concern is not the correlation of varying CEF funds with either a bull market (leveraged equity funds usually preferable) or a flat to down market (buy write option funds usually better) but rather the authors assertion that many of the buy write funds such as ETV (which is among Mr. Albo's long standing buy choices) are providing destructive return of capital: " ETV, have a total return lower than distribution rate. This is a red flag that the high distributions came at a cost of reducing the NAV, in other words, these were examples of destructive ROC." I do not believe this is the case. I would suggest that this may appear to be the case if one compares the distribution to the NAV distribution only, forgetting that the actual distribution percentage is a function not of just the NAV distribution but also the market price which in these CEFs is often significantly discounted from the NAV.
Has Linn Energy Finally Bottomed? [View article]
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron's long-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
If the shorts are successful in blocking the merger they will walk away with their blood money and Linn will be ill for a while. One can only hope that the Berry holders see this market price lowering for the financial manipulation that it is and that once the merger is completed, the dividend increases, and the shorts pull out that the stock prices of LINE/LNCO will quickly rebound.
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron's long-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron's long-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Lots of uninformed amateur analysis out there - make your best informed decision...
Linn Energy (LINE -3.4%) and LinnCo (LNCO -4.3%) trade lower following a weekend Barron's article discussing that LINE's distributable cash flow may be overstated and concerns over the pending merger with Berry Petroleum (BRY -2.4%). Barron's long-held view is that LINE's accounting is aggressive because the company wants to recognize the financial benefits of the puts but not the costs. (earlier) [View news story]
Step Up To UTF [View instapost]
Today's volatility in Linn Energy (LINE -2.3%) and LinnCo (LNCO -2.3%) apparently is traced to a notice of effectiveness from the SEC over the proposed takeover of Berry Petroleum (BRY -2.4%). RBC analyst John Ragozzino says he has a "high degree" of conviction the deal still will close, though it could be delayed to mid-July. [View news story]
Renewed worries over cash flow? MLP liquidation pressure? There's no apparent news behind today's weakness in Linn Energy (LINE -3.5%), LinnCo (LNCO -3.7%) and Berry Petroleum (BRY -2.8%). LINE and LNCO plan to acquire BRY for $4.3B, the first-ever acquisition of a public C-Corp by an upstream LLC or MLP. [View news story]
Renewed worries over cash flow? MLP liquidation pressure? There's no apparent news behind today's weakness in Linn Energy (LINE -3.5%), LinnCo (LNCO -3.7%) and Berry Petroleum (BRY -2.8%). LINE and LNCO plan to acquire BRY for $4.3B, the first-ever acquisition of a public C-Corp by an upstream LLC or MLP. [View news story]
For me, a buying opportunity to secure a decent yield which my research suggests is relatively safe.
Use Linn Energy To Build Income Now [View article]
As there seems always to be a fair amount of confusion regarding MLP taxation principles I suggest a visit to the National Association of Publicly Traded Partnerships http://bit.ly/yb1qPX.
And of course there is LNCO for those allergic to complexity...
Use Linn Energy To Build Income Now [View article]
Use Linn Energy To Build Income Now [View article]
Linn Energy (LINE) -5.1% premarket after a weekend Barron's article warns of a sharp drop if the dividend gets cut. LINE's 7.5% dividend yield has supported the company's high unit price even as its fundamentals have faded; in Q1, LINE failed to produce enough cash to cover its distribution, even by its generous measure of distributable cash flow. LNCO -6.8% premarket. [View news story]
Linn Energy (LINE) -5.1% premarket after a weekend Barron's article warns of a sharp drop if the dividend gets cut. LINE's 7.5% dividend yield has supported the company's high unit price even as its fundamentals have faded; in Q1, LINE failed to produce enough cash to cover its distribution, even by its generous measure of distributable cash flow. LNCO -6.8% premarket. [View news story]
"
To the Editor:
Is Andrew Bary in the pocket of the Linn shorts? Does anybody at Barron's edit his work before it is published? Here are some reasons why, in my opinion, the answers to these questions seem to be, respectively, yes and no.
Mr. Bary's latest specious smear piece on Linn ("Twilight of a Stock Market Darling, May 6, 2013) raises many questions about whether Mr. Bary--and, indeed, Barron's--ought to be viewed as credible. Here are a few:
1. Mr Bary starts his article by saying that Linn's units "may" be worth less than the market price. To say that the units "may" be overvalued is to say nothing at all. They also "may" be worth more than the market price.
2. But that lapse in logic pales by comparison to that contained in Mr. Bary's next paragraph. Apparently disappointed that his prior attack on Linn didn't cause the collapse of its unit price, Mr. Bary actually attributes Linn's unit price sustainability to the claim that Linn's investor base mistakenly believe that Linn is a midstream, rather than an upstream, MLP. That allegation is obviously unsubstantiated and patently incapable of substantiation. By the way, in my experience and from reading relevant comments on Seeking Alpha, Linn's investor base appears more sophisticated than Mr Bary or his editors.
3. Mr. Bary also sees dire consequences because in one quarter with serious winter weather problems incurred by many exploration and production companies, not just Linn, distributable cash flow was less than its distribution, although its annual distributions (including the contemplated increase in Linn's distribution) is projected to be more than covered by distributable cash flow. There are scores of MLPs which often have a quarter in which exogenous events cause distributable cash flow to fall below their quarterly distributions only to have the distribution covered annually.
4. Mr. Bary next attacks Linn's production, but look carefully at how he does so. Because of the winter weather issues Linn's first quarter production was 796 mmcf/d, which Mr. Bary trumpets was "down" from the 800 mmcf/d in the 4th quarter of 2012. The difference between the 800 mmcf/d in the 4th quarter of 2012 and the 796 mmcf/d in the storm ridden first quarter of 2013 is so small and the result of the inclement weather that it hardly seems the making of a trend, much less a disaster. Yet when comparing the 796 mmcf/d in that first quarter with the 782 mmcf/d in the third quarter of 2012 Mr. Bary says that this improvement (which is more than 300% greater than the miniscule shortfall in the stormy first quarter)is "little changed".
5. Mr. Bary then points out that under GAAP accounting Linn habitually loses money. But so do many--if not the vast majority of-- -MLPs. Nobody who is a serious MLP investor looks at the GAAP earning of limited partnerships. For upstream companies like Linn, GAAP accounting is distorted by heavy depletion and intangible drilling cost write-offs. Mr. Bary ignores these inconvenient facts. In fact he never even mentions the words "depletion" or "intangible drilling costs".
6. Mr. Bary then re-visits the derivative accounting issues raised in his prior negative article, and once again he fails to note that Linn's accounting for distributable cash flow is based upon the very same rules required by the Financial Accounting Standards Board in accounting for derivatives for GAAP earning purposes. This is a meaningful omission.
7. Mr. Bary relies for his thesis on hedge fund analysts and principals quoted in the article. Another serious omission is a disclosure of whether these sources are or have been short Linn and, if so, the extent of their short position. It is hard to give much weight to the Hedgeye allegation that Linn, which has a $2.90 distribution even before its contemplated increase post- Berry acquisition, is only worth between $5.48 and $18.17 and a likely inference is that Hedgeye or its clients have a short position in Linn.
8. Finally, it makes little sense for Mr. Bary to compare Linn to the major integrated slower-growth companies such as Exxon Mobil and Chevron or even to exploration and production companies such as Newfield or Devon. Linn, as an LLC considered for income tax purposes as an MLP, is not a taxable entity. Pass-through entities such as MLPs have a lower cost of capital than C corporations. Linn's distributions to unit holders are tax deferred. Linn's yield has been consistently orders of magnitude higher than the C corporations to which Mr. Bary and his hedge fund sources compare it."
Beware Of Covered Call Funds [View article]