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Investments on the LINE

Tickers in this article: BRY LINE LNCO

The press release doesn't explain where they come up with the figure of $4.3 billion. It concludes by saying, "Our investigation concerns possible breaches of fiduciary duty and other violations of law related to the approval of the transaction by the company's board of directors; in particular, whether the company undertook a fair process to obtain fair consideration for all shareholders of Berry Petroleum."

For more information regarding the investigation you can contact Ryan & Maniskas, LLP (Richard A. Maniskas, Esquire) toll-free at (877) 316-3218 or by email at All I know about this firm is Ryan & Maniskas, LLP is a national shareholder litigation firm.

Fundamentally, this deal looks very good for the future dividends of LINE and LNCO. If the deal goes through they'll be buying a company BRY that in the trailing 12 months generated over $955 million in revenue. BRY steps into the earnings confessional on Thursday and the earnings conference call should be the highlight of the day.

Analysts' consensus estimate for EPS is that BRY will report around 7 cents per share in the latest quarter. This is only one cent higher than the year-ago quarter. Sales growth and revenue estimates for the fourth quarter of 2012 are around $253 million, which would equal a shining 11% increase over the same quarter in 2011.

Let's see a five-year chart of BRY's share price and quarterly per share revenue.

BRY ChartBRY data by YCharts

No wonder the smart folks at LINE want to own this company, although BRY has had a fairly hefty debt load that, as of the previous quarter, was $1.61 billion. Hopefully the upcoming earnings results will discuss this aspect of BRY's balance sheet.

LINE's price chart and quarterly per share revenue over the past five years lines up a little less symmetrically than BRY's. That doesn't necessarily bother this analyst because as of the last reportable quarter LINE's year-over-year quarterly revenue had increased by nearly 56%!

LINE ChartLINE data by YCharts

All that being said, I have a confession to make and it shouldn't surprise most readers. On Friday afternoon I sold my shares of LINE for a nifty profit. Then I immediately entered a good-until-cancelled order to buy them back plus a few extra if the share price drops below $36.

This is my version of "sell the news and buy the rumor" or "sell the news and buy the impending lawsuits." I obviously like LINE and its super-generous dividend policies (current yield-to-price of 7.53%), and I like LNCO as well.

Yet, I agree with Jim Cramer, who wrote in his "Real Money" editorial on the current levels of the stock market averages, that the "'buy on pullbacks' call that so many made was, and is, again met by 'we need a bigger pullback.' I like that, too."