Growth Portfolio holding Linn Energy LLC (NSDQ: LINE) announced plans to sell 17 million additional units to the public in a secondary offering. In addition, the company will give underwriters the option to sell another 2.5 million shares to cover demand, bringing the total offering to 19.5 million units.

Linn Energy’s current float stands at about 175 million units; this secondary offering amounts to roughly 11 percent of the partnership’s current capitalization. As we’ve written on several occasions over the past two years, investors’ knee-jerk reaction to a secondary offering is to sell the stock to avoid dilution. True to form, Linn Energy is off about $1.60 per unit, or 4 percent, in today’s trading session.

But secondary offerings historically have marked outstanding opportunities for investors to buy high-quality publicly traded partnerships at a discount. Our favorite MLPs usually issue units to fund acquisitions or organic expansion projects that ultimately result in higher distributions for unitholders. These post-offering dips are generally short-lived; in the majority of cases, the units return to their pre-offering price within a month or two.

Linn Energy’s management team has said that it will use the proceeds from the sale to pay down its credit lines, increasing the firm’s capacity to make opportunistic purchases.

Linn Energy has paid a quarterly distribution of $0.69 for the past two quarters and last boosted its payout in May 2011. In light of the firm’s recent acquisitions, the payout could grow to $0.72 per quarter by the mid-2012 and increase at an annualized pace of 7 percent to 9 percent over the next few years. Linn Energy has hedged 100 percent of its natural gas production through 2015 and all of its oil production through 2013; the partnership has no near-term exposure to volatile commodity prices. Linn Energy rates a buy under 40.