Editor's note: Below is an excerpt from today's Morning Newsletter written by Hedgeye Energy Sector Head Kevin Kaiser.
I don’t spend a lot of time trying to forecast what I’m ill-equipped to forecast with a high degree of confidence. I don’t know when lightning will strike. But I can put forth investment ideas that are based on sound data and reasoning, and are likely to work under various assumptions and scenarios. And when the spark is set, I am prepared and well-positioned.
I’ve written about no company more than LINN Energy (LINE, LNCO) over the past two years because I thought that the system was extremely unstable. The basic story has always been the same – the company makes no real profit, but dividends out $1 billion per year, which it pays for via serial debt and equity issuance. As I saw it, it was highly likely to end disastrously. The pushback was consistent, “There’s no catalyst.” This was not a good idea, I was told, because there wasn’t a lightning storm in sight…