You can make a lot of money by following the advice of a billionaire. That’s why I think you should follow what Leon Cooperman, the billionaire and founder of hedge fund Omega Advisors, has to say about two energy stocks. I’ve been following both companies for quite some time, and I agree: Both Linn Energy LLC (NASDAQ:LINE) and SandRidge Energy Inc. (NYSE:SD) have the potential to make investors a lot of money.
Cooperman has been fairly vocal in his support of Linn Energy LLC (NASDAQ:LINE) as it has battled negativity this year. Recently he wrote a strong letter to the editor of Barron’s refuting several negative stories it had published this year. He even goes so far as to say that the reporter responsible for the stories is “in the vise of a small group of unprincipled short sellers.” He ends his letter defending Linn Energy LLC (NASDAQ:LINE) by saying that his firm is “convinced of the professionalism of the company’s management.” Further, “we are optimistic about the company’s future growth and financial performance; and we believe strongly that the distortions of the three Barron’s articles will not, in the end, carry the day.”
I’m convinced that he’s right to be bullish on Linn Energy LLC (NASDAQ:LINE). I’ve been an investor in the company practically since it went public in 2006. The recent negativity on the company will eventually blow over, as it always does after these “bear raids” end. The biggest form of uncertainty is that these negative attacks have pulled in the SEC to investigate. That’s putting the complex merger involving Linn Energy LLC (NASDAQ:LINE), its affiliate LinnCo LLC (NASDAQ:LNCO) and Berry Petroleum Company (NYSE:BRY) on shaky ground.
If the merger falls through, LINN could struggle to grow, because the company’s main source of growth is acquisitions. One of the purposes of taking LinnCo LLC (NASDAQ:LNCO) public was to help it in its quest to acquire additional energy reserves, particularity companies such as Berry Petroleum Company (NYSE:BRY). That being said, if the SEC finds nothing wrong with Linn Energy LLC (NASDAQ:LINE)’s accounting, and the merger with Berry Petroleum Company (NYSE:BRY) goes through, LINN’s units could skyrocket. According to Cooperman, and a number of Wall Street firms including Stifel, the company is worth about $40 per share, which would make it worth substantially more than where it’s currently trading.
The second energy stock Cooperman is bullish on is SandRidge Energy Inc. (NYSE:SD). At a recent conference, the billionaire called out the oil and gas producer as one of his top 10 stock ideas. He thinks the company could be a “potential double” and that it has the best risk reward of the 10 stocks he named.