Linn Energy: That Did Non Operate In Addition To Thus Well
From the here.) Obviously a practiced business office of this loss was write-downs from writing off oil together with gas properties that became less valuable equally gas prices fell.
However at that spot should endure an offsetting write-up inward the value of the hedges together with then that defence volition expire solely together with then far.
Whatever: unusually for a stock I write virtually inward Linn's representative I (mostly) believe inward the validity of the accounts. The accounts state quite bluntly that
(a). This is a loss making enterprise.
(b). That this trouble organisation pays out large together with increasing distributions despite those losses and
(c). The trouble organisation raises e'er increasing amounts of funds using ever-more-novel ways of doing it.
To me that looked similar a Ponzi system on its end legs. Indeed to come upwards to a unlike determination I idea you lot had to convey closed to non-standard non-GAAP measures equally reality. In other words you lot direct hold to ignore the audited bottom describe for the company.
Many people it seems produce ignore the bottom line. They are encouraged yesteryear the management - together with they mightiness endure correct - merely for the 2nd I direct hold (and retain) a unlike opinion.
But I was wrong
Despite non changing my persuasion on the fundamentals of Linn I volition confess to existence incorrect on 1 of import (nay critical) point.
When Linn launched Linco (their non-MLP associate which exists solely to grip interests inward Linn) I idea the money-raising was on its end legs. Specifically I idea that rather than target the non-sophisticated mom-and-pop investors who purchase MLPs they were existence forced to target to a greater extent than sophisticated investors equally they had locomote the non-sophisticates out of money.
I idea LinnCo meant Linn was on its end legs.
I was wrong. Spectacularly (and unprofitably) wrong.
Yesterday (as many volition direct hold noticed) Linn used Linco stock equally a currency to purchase a C-Corp - a really large acquisition - their biggest to date.
I did non run across it coming. It was non fifty-fifty on my master copy listing of risks inward the position. Wrong!
This is a bully bargain for Linn. They expire to swap what I believe to endure near-worthless stock for closed to one-time - merely nonetheless valuable oil assets. Those assets volition generate cash - cash that tin maintain this whole matter rolling along for a few to a greater extent than years.
So fifty-fifty if I am correct that Linn is a Ponzi (and many companionship supporters disagree amongst me) it is non a Ponzi that volition collapse adjacent week. And together with then my chance to turn a profit volition non endure adjacent week.
I covered most of my short.
For a loss.
John
PS. The companionship straight off has closed to fourth dimension to seek out that it is non a Ponzi. Substantial GAAP profits mightiness endure a kickoff - merely hi - 10 to a greater extent than years of distributions would besides endure effective.
However at that spot should endure an offsetting write-up inward the value of the hedges together with then that defence volition expire solely together with then far.
Whatever: unusually for a stock I write virtually inward Linn's representative I (mostly) believe inward the validity of the accounts. The accounts state quite bluntly that
(a). This is a loss making enterprise.
(b). That this trouble organisation pays out large together with increasing distributions despite those losses and
(c). The trouble organisation raises e'er increasing amounts of funds using ever-more-novel ways of doing it.
To me that looked similar a Ponzi system on its end legs. Indeed to come upwards to a unlike determination I idea you lot had to convey closed to non-standard non-GAAP measures equally reality. In other words you lot direct hold to ignore the audited bottom describe for the company.
Many people it seems produce ignore the bottom line. They are encouraged yesteryear the management - together with they mightiness endure correct - merely for the 2nd I direct hold (and retain) a unlike opinion.
But I was wrong
Despite non changing my persuasion on the fundamentals of Linn I volition confess to existence incorrect on 1 of import (nay critical) point.
When Linn launched Linco (their non-MLP associate which exists solely to grip interests inward Linn) I idea the money-raising was on its end legs. Specifically I idea that rather than target the non-sophisticated mom-and-pop investors who purchase MLPs they were existence forced to target to a greater extent than sophisticated investors equally they had locomote the non-sophisticates out of money.
I idea LinnCo meant Linn was on its end legs.
I was wrong. Spectacularly (and unprofitably) wrong.
Yesterday (as many volition direct hold noticed) Linn used Linco stock equally a currency to purchase a C-Corp - a really large acquisition - their biggest to date.
I did non run across it coming. It was non fifty-fifty on my master copy listing of risks inward the position. Wrong!
This is a bully bargain for Linn. They expire to swap what I believe to endure near-worthless stock for closed to one-time - merely nonetheless valuable oil assets. Those assets volition generate cash - cash that tin maintain this whole matter rolling along for a few to a greater extent than years.
So fifty-fifty if I am correct that Linn is a Ponzi (and many companionship supporters disagree amongst me) it is non a Ponzi that volition collapse adjacent week. And together with then my chance to turn a profit volition non endure adjacent week.
I covered most of my short.
For a loss.
John
PS. The companionship straight off has closed to fourth dimension to seek out that it is non a Ponzi. Substantial GAAP profits mightiness endure a kickoff - merely hi - 10 to a greater extent than years of distributions would besides endure effective.
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