Friday, February 01, 2008
This SEC filing hit the tape and Linn Energy is selling off. Outside of the fact that it says Deutchebank holds 6.8 million shares....i'm not sure why this is selling off again. It doesn't say the shares are hitting the market or are being sold. Am i missing something here? Anyone can figure this one out please post on the comments section...preferably before we see a 15% yield.
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joseph cioffi's Source Page - Associated Content
8 comments:
This report shows Duetsche Bank owning 6.595992 million shares, on yahoo olders it shows DB holding 6.675952 million shares as of Sept 2007. This would indicate about 80K
shares sold by DB since Sept 2007.
I don't know why this would be significant.
JF50
i don't know either..yet the stock sank 1 point when the filing hit dow jones.
i give up!
Why does Duetsche, Goldman, and Merrill hold so many shares of LINN? Did they buy the PIPEs looking to flip their discount for a quick buck? (but then got left holding the bag?)
Linn is yielding 12.01% at a price of 20.80...850 pts above the 30 year.
I know its all pipe shares...i still don't understand what in that filing is causing a 1 dollar drop. It makes no sense to me at all.
i guess i'm just dense.
correction..about 850 above the 10 year
The banks own the shares on behalf of hedge funds that get the performance swapped to them. This is to get around UBTI issues for tax exempt entities.
As the poster above me mentioned, the banks hold mlp units to offer total return swaps to hedge funds. Basically, the bank holds the units, files k-1s etc and the hedge funds receive the net performance and pay a floating fee in return for avoiding actual ownership of the units.
I think many hedge funds experienced redemptions and banks are now starting to liquidate their positions, as they don't want to be stuck sitting with unhedged equity.
As it relates to LINE, you have to look at it in concert with the other E&P mlps (atn, bbep, cep, enp, evep, lgcy, qelp, and vnr) which have all been struggling recently. Vnr and qelp both trade at a double digit yield as well. The problem is there isn't enough retail demand for upstream mlps. The group was propped up by institutions during the first half of 2007 and are now reeling as pipes expire and retail isn't there to pick up the slack. The sector is still new and it will take some time for retail investors to realize that buying an mlp such as line with a double digit yield and high single digit growth is a better investment than an mlp like fgp that has a single digit yield and no growth. The mlp market can be highly inefficient at times--this is one of those times
"Wow" you guys really know your stuff. The question I have is: with the price of the MLPs stock down so far, how does it effect there ability to borrow money an do business?
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