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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: George8 who wrote (98497)4/1/2008 5:47:14 PM
From: Fugitive Pauper  Read Replies (1) of 206227
 
Regarding LINE's reported loss: this is a pure accounting loss due to hedging, to be expected in an up market. It is not actually a loss at all, just a statement of how much more the company could have earned had it not hedged its production at what is now below-market price. The foregone profits resulting from hedging can be large in a strong up market, but the MLP/LLC companies really do need to hedge quite a lot to protect their distributions. Insurance is never cheap, and the fact that upstream MLPs need to buy it can make them relatively unattractive to aggressive investors who value potential capital gains over relatively safe current income. I say, why not invest both ways? Current income pays the bills, capital gains fund the fun.
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