What: Units of LINN Energy LLC (LINEQ) and shares of LinnCo LLC (NASDAQ: LNCO) are getting pounded again on Monday. Both were down about 17% in morning trading.
LINE Price data by YCharts
Monday's sell-off was again linked to falling oil prices, which tried to make a comeback in early trading, but then sold off again. As of noon, oil prices had dropped another 3% to just under $56 per barrel.
So What: Investors are bailing on LINN Energy and LinnCo amid fears that the company will now have no choice but to cut its very lucrative payout. While LINN Energy does hedge a bulk of its oil production, that won't do the company a lot of good if the price of oil stays low for an extended period of time. This is kindling fears that the company's debt levels are too high, putting it at a greater risk of default. Because of these worries investors are selling now rather than waiting to see if fears turn into a reality.
Now What: There is not much investors can do right now but sit tight. There are few buyers of oil stocks in the market place because the price of crude won't stop heading lower. This is leading to an unabated, panic driven sell-off in anything related to oil, especially companies with heavy debt loads.
