Linn Energy And The 5 Stages Of Grief

Phillip Teeple profile picture
Phillip Teeple
19 Followers

Summary

  • Calculating a weighted average debt maturity.
  • Depreciation is a real factor in many industries as assets must be replaced.
  • Would you buy the bonds?

General:

If you are reading this article you are quite possibly in one of the five stages of grief: denial, anger, bargaining, depression, or acceptance. I am somewhere in the last two. I accepted my poor investment decision and want to determine what I may have missed and how to avoid it in the future. I appreciate Seeking Alpha comments as a good place to blow off a little steam and throw some blame around, but I don't think it typically belongs in the articles. As investors, we make the best decision possible at the time with what we know at the time. We try to predict the future within reason but are often wrong. Looking back, it is easy to see that I made a poor decision.

Executive summary:

Consider calculating a weighted average debt maturity to determine how much the company needs to save per quarter to meet future repayment obligations and determine a more accurate EPS. Companies that are dependent on rolling their debt and are tied to a volatile commodity need extra attention. Depreciation is a very real expense that capital must be planned to replace depleted assets. The company needs to maintain a reasonable level of debt, provide a fund for repaying the debt, or have truly substantial resources to weather a downturn.

Other considerations are buying insurance in the form of puts, or only purchasing in a non-tax-sheltered account so that any losses can be realized against taxes. Even though you have a long term outlook and are value driven, your capital investment may not survive the market cycle. Would you buy the company's bonds or are they operating on the greater fool theory? Is the company a price maker or a price taker? Price maker's have far greater control of their own destiny. How does the price of the dollar

This article was written by

Phillip Teeple profile picture
19 Followers
I have a Masters in Business Administration and BS in Civil Engineering. I have been investing for about 11 years for myself, primarily in equities, closed end funds, and options.

Disclosure: I am/we are long LNCO, KYE, BP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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