07/02/13: Linn Energy
We’re downgrading Linn Energy (NSDQ: LINE) to SELL after the partnership today announced an informal Securities and Exchange Commission probe of its accounting. The probe endangers Linn’s pending acquisition of Berry Petroleum (NYSE: BRY), the linchpin of its growth strategy.
Factoring today’s drop, LINE units have provided total returns of 73.6%, 113.4% and 102.1%, respectively in the Personal Finance, MLP Profits and The Energy Strategist portfolios. But now that the SEC has, at least for the time being, legitimized recent complaints about Linn’s financials, cashing out is the most prudent course of action. Sell Linn Energy.