As far as Linn Energy goes, who’s right, Jim Cramer, Leon Cooperman, Barron’s, Keith McCullough, Dan Dicker…or the SEC? Cramer, Cooperman and Dicker were all saying to buy shares of LINN, while McCullough and Barron’s were saying beware of the stock and the extremely high dividend, too high in fact to be sustainable.
And then there’s the SEC, who is now investigating Linn Energy, which is why the stock took a big hit today, down over 17% when it was announced the SEC is looking into their accounting.
The Securities and Exchange Commission has begun an inquiry into oil and gas explorer/producer Linn Energy (LINE), a master limited partnership, and LinnCo (LNCO), its corporate entity. The SEC is investigating Lynn’s acquisition of Berry Petroleum (BRY) and accounting issues. Linn stock is down 11.6% and Berry is down 6.5% premarket. Barron’s raised questions about Linn Energy’s accounting for derivatives expenses, and other issues, in several skeptical stories in recent months. Linn’s press release on the subject, here, says the inquiry could impact the timing of the Berry deal, but says Linn remains committed to the transaction.
In a letter to the editor published June 22, investor Leon G. Cooperman said Barron’s stories distorted some of the accounting and other issues raised, saying his firm, Omega Advisors, is convinced of the integrity of Linn management and “optimistic about the company’s future growth and financial performance.” (Barron’s)
Below is video of Jim Cramer and Dan Dicker of TheStreet.com discussing Linn Energy and even claiming that the “research department” that did the research for the Barron’s article attacked Linn Energy in the hopes of drumming up money for a new fund they are starting….here’s the Barron’s article on LINN.
Here’s some more background on the battle between McCullough and Cramer over Linn Energy.
What’s more, Cramer, who’s on CNBC on a daily basis, has yet to discuss Linn Energy and the SEC investigation on TV.
To me, LINN is the first stock Cramer should be talking about today and letting small time investors know what he now thinks they should do with the stock. Plus, in the past, Cramer has said he has a rule that if a stock is investigated by the SEC over accounting issues then you should sell that stock. But the world of the stock market is not an easy place to invest in, there are too many risks and unknowns, so proceed with caution.