Linn Energy LLC (LINE), BreitBurn Energy Partners L.P. (BBEP): Don’t Listen to Jim Cramer When It Comes to This Stock

Page 1 of 2

Amiable stock market guru Jim Cramer seems to change his mind faster than I can keep up with the news flow. Just the other day I was about to quote him in an article about embattled Linn Energy LLC (NASDAQ:LINE) only to find out that he’d already changed his mind on the matter. While I understand his logic, that doesn’t mean I agree with it.

Has the sun finally set on Linn Energy LLC (NASDAQ:LINE)? (Source: LINN Energy)

The quick one-eighty on the company came after Linn Energy LLC (NASDAQ:LINE)’s voluntary disclosure that the SEC is investigating its accounting procedures. Those procedures have been in the spotlight all year after being called aggressive and overstated by short sellers. What surprises me is that Cramer is throwing in the towel now when it’s really only logical that the SEC should look into the situation given how aggressive these short sellers have been in attacking the company.

In changing his mind Cramer said that, “I had liked the company, but they’re under the microscope for accounting irregularities … And whenever a company is scrutinized for issues such as these, I sell. Even though the stock is cheap and I otherwise still like it, I practice discipline and sell.” While I can understand having a discipline like that, you are talking about a company that is being aggressively attacked by short sellers in a way that just seems a bit over-the-top.

Not only that but this isn’t a company that’s going to zero because the SEC discovers it’s a mirage. The company has real assets to back its business. Linn Energy LLC (NASDAQ:LINE) has ammassed more than three trillion cubic feet equivalent of proved developed reserves, another two billion cubic feet equivalent of proved undeveloped reserves as well as its hedge book, a gas plant and other facilities. That’s $10 billion in real tangible value and it doesn’t count the 14 trillion cubic feet of unproved drilling inventory which are estimated to be worth between $6.5 billion and $11.2 billion. That equates to a net asset value that’s conservatively worth $37.34 per unit and potentially worth up to $65 per unit.

I’m not saying that SEC investigations are something to ignore, however, high-profile short sellers have a way of dropping a stock down by bringing in the SEC. Take the case of Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). Famed short seller David Einhorn put together a 110 slide Power Point on the company’s accounting issues. That would seem to be what prompted an investigation by the SEC, which caused its stock to really take a dive. Despite the attacks and that additional scrutiny, over the past two years the company has continued to sell coffee. All the while its stock has steadily recovered.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!