Very Angry At Barrons

I had been buying up LINE (as per previous post) and only had about half what I wanted. I think this is one of the biggest bargains out there as I posted earlier....do a search of my posts for last week for the reasons. Barrons had to put out their LINE article and now I can't buy it on the cheap anymore. FWIW I think the stocks is still VERY cheap even after the 20% run. This may be an unpopular opinion here but I think understanding fundamentals and "FA" is growing in importance. EVERYONE uses TA (it's still my primary ST and IT method).....even bigger institutions and especially large quant funds. LINE is a prime example on the importance of FA for LT positions. It's price was plain stupid even in a depressionary environment. IMHO, if you are an investor DOW is worth a look at these prices. It will work in every situation EXCEPT greater depression 2.

Edited by Cirrus, 29 December 2008 - 10:14 AM.

I had been buying up LINE (as per previous post) and only had about half what I wanted. I think this is one of the biggest bargains out there as I posted earlier....do a search of my posts for last week for the reasons.

Barrons had to put out their LINE article and now I can't buy it on the cheap anymore. FWIW I think the stocks is still VERY cheap even after the 20% run.



This may be an unpopular opinion here but I think understanding fundamentals and "FA" is growing in importance. EVERYONE uses TA (it's still my primary ST and IT method).....even bigger institutions and especially large quant funds. LINE is a prime example on the importance of FA for LT positions. It's price was plain stupid even in a depressionary environment. IMHO, if you are an investor DOW is worth a look at these prices. It will work in every situation EXCEPT greater depression 2.

Beware the house of (credit) cards if you are bullish.....No more house ATM machines?

Are we talking about the same stock? I'm referring to LINE, a MLP with pipeline assets and massive energy reserves (multiple TCF of NG and CL to boot). They have an 18% divy yield and are completely hedged out for 2 years with significant hedging after that. They locked in prices near 100CL equivalent with partial upside participation. It's a good management team, too. They are the large cap in MLP universe so there is institutional support (which hurt bad on the downside given liquidations). Again, NG cycles and drilling is plummetting. US NG depletion rates are ridiculously high. Shale NG sees 50% first year depletion in many cases. When drilling falls off supply is less than a year behind. It's a cycle that has repeated since the dawy of NG and is more in play now than ever given depletion rates growing sifnificantly through the years. You buy weekly charts that have bottomed with some sort of base once NG is below the marginal cost of production (and it is in many areas). Now the charts haven't bottomed or based yet. However, I'm in LINE due to hedges, divy, management and assets. You get payed near 20% a year while you wait for the cycle. It will come...eventurally. Their hedges should get them through.

insiders sold recenty, the quick ratio is under 1 and they seem overextended on LT debt to me, and large negative Earnings. yield is only around 20% for this risk - Id say lighten up an buy back in later or buy a different divvy play - every recent volume spike up has turned into a reversal. should come down to fill the gap or retrace to the 20ema at least. or you culd do something fancier with options. klh

Edited by dasein, 29 December 2008 - 02:37 PM.

insiders sold recenty, the quick ratio is under 1 and they seem overextended on LT debt to me, and large negative Earnings. yield is only around 20% for this risk - Id say lighten up an buy back in later or buy a different divvy play - every recent volume spike up has turned into a reversal. should come down to fill the gap or retrace to the 20ema at least.

or you culd do something fancier with options.

klh

dasein...take a closer look at the business and recent events that are likely not reflected in your analysis. You also have to understand the nature of an E&P operation. They have massive reserves in the proven and proven and probably categories that are unexploited. Also they have a very high quality of reserves with a 21 year reserve life. Their production is actually quite small relative to their reserve base which means they have large room for growth on the next cycle. There's also some asset sales not reflected on the balance sheet yet. You have to forget about the quarterly earnings as reported because hedging is causing large gains and losses due to commodity price volatility. Remember they are an MLP, too, so they're run a little differently than a standard E&P play. As far as insider transactions their were several direct buys from various insiders until Michael Linn (as in "Linn Energy") sold three blocks around Thanksgiving. He still owns 4% of the company and the sales were a small part of his holdings. In this environment who knows why these guys sell but my guess is diversification or persoanl financial problems. See the below info:



100% of current production levels hedged for 2009, 2010 and 2011

The Company utilizes commodity hedging to capture cash flow margin and reduce cash flow volatility. Due to the significant decrease in commodity prices during the third quarter, the Company reported a gain on derivatives from oil and gas hedges of approximately $845.8 million for the quarter, including $887.2 million of non-cash change in fair value of hedge positions. Non-cash gains or losses do not affect adjusted EBITDA, cash flow from operations or the Company's ability to pay its cash distributions.

For the third quarter 2008, the Company reported net income from continuing operations of $921.9 million, or $8.06 per unit, which includes a non-cash gain of $887.2 million, or $7.76 per unit, from the change in fair value of commodity hedges covering future production, a non-cash loss of $3.9 million, or $0.03 per unit, on interest rate hedges and a realized loss of $13.2 million, or $0.12 per unit, from hedge cancellations.

Asset Sale Update

The Company to date has announced the sale of non-core assets for a combined contract price of over $1 billion in three separate transactions. On October 9, 2008, the Company entered into an agreement to sell its deep rights in certain central Oklahoma acreage, including the Woodford Shale interval, for a contract price of $229.1 million, subject to closing adjustments. The Company plans to use the net proceeds from the sale to reduce indebtedness. The closing of this sale is expected to occur during the fourth quarter 2008.

During the third quarter, the Company completed the sale of its interests in oil and gas properties located in the Verden area of Oklahoma for a contract price of $185.0 million and its interests in oil and gas properties located in the Appalachian Basin for a contract price of $600.0 million. The Company used net proceeds from both sales to reduce indebtedness.

Hedge Information

At current production levels, the Company is 100% hedged for 2009, 2010 and 2011. For 2009, the Company's natural gas production is hedged at a weighted average price of $8.32 per Mcf and oil and NGL production at $102.21 per barrel. For 2010, the Company's natural gas production is hedged at a weighted average price of $8.05 per Mcf and oil and NGL production at $99.68 per barrel. The Company's natural gas production is hedged for the next four years and oil and NGL production is hedged for the next six years. These hedge positions help ensure cash flow and are detailed in Schedule 9 in this press release.

Cash Distributions

On October 20, 2008, the Company's Board of Directors declared a quarterly cash distribution of $0.63 per unit, or $2.52 per unit on an annualized basis, with respect to the third quarter 2008. The distribution will be paid on November 14, 2008 to unitholders of record as of the close of business on November 7, 2008.

Unit Repurchase Program

On October 9, 2008, the Board of Directors authorized the repurchase of up to $100 million of the Company's outstanding units. The Company may purchase units from time to time on the open market or in negotiated purchases. The timing and amounts of any such repurchases will be at the discretion of management, subject to market conditions and other factors, and will be in accordance with applicable securities laws and other legal requirements. The repurchase plan does not obligate the Company to acquire any specific number of units and may be discontinued at any time. To date, the Company has not repurchased any units.

I've been accumulating LINE as well - the 20% up move is probably short lived in the near term. Put in good till cancel buys at at $10 - and set aside money in the MM. I also am accumulating APL - in my gamboling account. I don't plan on an exosure of more than 1,000 shares.

It may or may not go to 10. I think it's more than a solid value below 15. At 19 or so I'll be selling calls against my position.

line........R@16.........18 .............S@11-12 if u are dividend hungry take a look at NRO!

Edited by vitaminm, 29 December 2008 - 11:52 PM.

Agree vitaminm....looking at the LT (weekly chart) 18.5 has been major support until the breakdown.