In a June 17 letter, Cooperman wrote "Omega Advisors, Inc. is comfortable with our investment in Linn Energy, we are convinced of the professionalism and integrity of the company's management, we are optimistic about the company's future growth and financial performance."
He further pointed out that Linn Energy has mostly hedged its energy production with costless swap contracts, potentially undermining claims that the company is under-reporting costs it incurs to hedge its energy risk.
Cooperman argued Linn Energy has capitalized the costs of its energy hedges in accordance with Generally Accepted Accounting Practices (GAAP). Non-GAAP metrics such as earnings before interest, taxes, depreciation and amortization (EBITDA) that are often cited by Linn Energy and investors, by definition, would not include the capital expense of put contracts, Cooperman's letter stated.
Finally, Cooperman highlighted that independent third parties
have valued LinnCo, the subsidiary in the Berry merger, at $35.92 a share and $39.64 a share. Those valuations remain well above Linn Energy's current share price and, according to Cooperman, take into account any tax liability the company would face in its proposed acquisition.
and Hedgeye, however, argued the company's shares could only be worth between $5.48 a share and $18.17 a share.
"[We] are of the view that the shares are undervalued and offer an attractive total return proposition -- dividend plus change in capital," Cooperman wrote in an e-mailed statement to
Voicemails left with Berry Petroleum weren't immediately returned.
-- Written by Antoine Gara in New York