Linn Energy has seen its shares fluctuate sharply as both
and Hedgeye question Linn Energy's ability to fund its current dividend and, consequently, the company's share price.
Linn's stock valuation and the strength of its financial position are of big importance as the company works to close the all-stock transaction of LinnCo and Berry Petroleum.
Were that merger to be completed, Linn Energy said it will be able to increase its annual dividend to $3.08 a share, or a yield of about 9% at current share prices.
In mid-June, Hedgeye Risk Management hosted a conference call to detail its analysis of why Linn Energy's dividend may be hard to support and its shares are overvalued.
In the wake of Hedgeye's analysis
first reported Cooperman's
of the company as its leading outside shareholder.
In a letter sent to
that was published on June 22, Cooperman noted that Linn's non-GAAP distributable cash flow metric would, by definition, exclude the costs of its capitalized energy hedges. In response
said Linn's deduction of those costs from Ebitda and DCF presented an "incomplete and overly optimistic picture" of the company's financial health. It favors GAAP metrics such as Linn's quarterly net loss of $222 million.
Jim Cramer, founder of
and contributor to
Real Money Pro
, currently owns Linn Energy shares in his Action Alerts PLUS charitable trust, along with co-portfolio manager Stephanie Link. Cramer has supported Linn Energy and invited CEO Mark E. Ellis on his
On Tuesday, Link said in a
Real Money Pro
that the charitable trust would sell 1,400 Linn Energy shares at $29 apiece.
"Our rules have always been to sell a stock with an SEC investigation -- because we have no edge in knowing what the outcome will be," Link wrote, while noting that the company's net asset value (NAV) remains unchanged at $40 a share and it continues to carry a 8.7% dividend yield.
Link said Action Alerts PLUS would continue to own 1,000 Linn Energy shares after its stake sale, roughly 1.2% of the overall portfolio.
-- Written by Antoine Gara in New York