Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Both LinnCo (NASDAQ: LNCO) and LINN Energy (LINEQ) jumped 10% today on a positive analyst report.
So what: Analysts at Bank of America Merrill Lynch released a report that said they don't think LINN Energy has inflated or distorted cash flow because of accounting practices. The company has been under pressure after Barron's and research firm Hedgeye Risk Management questioned the practice of capitalizing put contracts, which affect non-GAAP metrics and potentially the dividends the company pays.
Now what: This doesn't affect the informal investigation by the SEC, but it may give investors a little confidence that the company will be able to maintain its dividend. LINN Energy's 13.1% dividend yield and LinnCo's 11.6% yield both are big reasons why investors buy the companies' stocks, so if those payouts are in question it could be a huge hit. I don't see today's revelations as a sign to buy but they should help make long-term investors a little more comfortable with their dividends, because those don't appear to be in question just yet.
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