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Cramer: This Energy Company’s Payout Should Rise, Not Fall

Monday, 6 May 2013 | 6:49 PM ET
Linn Energy CEO: 100% Hedged on Gas
Monday, 6 May 2013 | 6:15 PM ET
Linn Energy CEO Mark Ellis discusses the latest quarter, the oil and gas industry, and what's ahead for the company.

Linn Energy was hammered on Monday, dropping more than 5 percent after a negative article by Barron's over the weekend.

Linn currently sports an 8.8 percent yield at current levels. However, the article said Linn "may be the country's most overpriced energy producer" and hinted that the stock's distribution might be in danger.

Source: Linn Energy

While Jim Cramer doesn't think there is anything wrong with being skeptical about a super high-yielding stock, he pointed out that Linn plans to raise its payout by 6 percent this year, not cut it.

In fact, Cramer's charitable trust used the weakness Monday to add to its position in Linn Energy.


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The company's CEO, Mark Ellis, told "Mad Money" he thought the article was misleading, and he disputed the assertion that its units may be worth far less than the current quote.

"We've had three different analyses done. They're all coming in with valuations in the high 30s to the mid-40s for the company," he said. "None of the valuations we've seen by any one of the independent parties is anywhere close to what was represented over the weekend in the Barron's article."


Disclosure: When this article was published, Cramer's charitable trust owned Linn Energy.


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