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.
Matt DiLallo owns shares of Linn Co, LLC and Linn Energy, LLC. Matt DiLallo has the following options: short January 2015 $20 puts on Linn Co, LLC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.