I have three quick ideas for today’s column, with the hope that one of them will resonate with you. Next week is my vacation week, so I hope that you will stay out of trouble until I can be with you again in the week of March 2nd. (We have a very interesting guest writer lined up for you though.)
First, Linn Energy (LINE), a core holding of mine, today bought Berry Energy (BRY) in an all stock deal, paying a 19% premium and more than the Reuters estimate of intrinsic value for the company. In spite of all this, Linn shares are UP almost 5% this morning, not what you’d expect for a company that is supposedly overpaying for a target. That’s how you know that Linn has been massively undervalued by the Street and deserves investment, even more so now.
With the purchase Linn adds 30% of proven reserves where it counts, in liquids and crude production in California but particularly in the Permian basin, where Linn has already terrific infrastructure and Berry’s assets are a terrific fit. Go on, add that to their very healthy and I believe extremely safe 8% dividend. You want more? Ok, I think Linn remains one of the best take-out targets in the patch – and anything under $40 is a gift. Even with the jump today, it’s a buy.
SM energy proved today that the Eagle Ford and the Bakken are easily number one and number two in hot hot hot plays in domestic liquids and crude oil. …