Chesapeake Energy - A possible double?

Submitted anonymously

I owned Chesapeake Energy (CHK) for a while. I sold if half way into its recent run-up. To me, it seems a great company, but I don't read company reports much. I don't believe they are accurate. The issues I have in all companies, especially oil exploration, is credit availability. CHK is not so much an exploration company, but I feel their dividend should be more substantial considering their position in pipes and the stuff in production. They recently sold some attractive assets and I worried if it was selling at a good price, collecting capital for a different venture, or an intrinsic issue that needed to be solved. I don't know CHKs' game plan; I don't know the condition of there bonds, I don't know anything about any company. CHK is a blue chip company in a cyclical market, I think the question should be, do you see gas stocks in general heading up? I bought this stock a little lower than where it is now, and held it for over a year. I think it is over sold based on nav, but you really gotta pick the bottom on these guys, or you'll get shaken out in the waiting.

If CHK is not needing to borrow money, which they shouldn't, and they are going to keep their eastern corridor, and if they are going to stay out of wind and solar, then I think it is a company that could double in short haste.

Chesapeake may double, but this blogger has some pretty serious concerns. Get the scoop on CHK here.

As with all companies, if they need to knock on the banker's door to achieve their goals, you better put your dollars into a new toy. If you had lunch with some chairmen, and you got a consistent, positive consensus of the future goals, then hop on. if your looking at value based on its' recent fallback, then just know that gas is going to cycle up as winter comes on, but this company is big, and moves slightly on cyclical momentum. Pickens plan is cute, but Nimby's will make it take decades to happen. Gas is less intrusive, and could get a pop now, as long as your company is not borrowing money, and I don't see it based on the dividend. They don't seem shareholder friendly. I understood when they got out of the nukes business, but selling gas assets made me drop CHK.

I do not own, and no longer watch this company, but shooting from the hip I'd say if you could grab this at 30, and watch it every day, with your finger on the sell button, it a play. I just didn't see these guys to have an inside track with gas. They'll come up with the tide, but if they don't keep their dividend producing assets then it is just a play. If they increase their dividend, hold onto it. But I think they need new management, like all companies on the market they need to be rewarded for performance, not position. It shouldn't be about who you know, it should be about what you know.

Based on its chart, CHK will give you a short term bounce, but that's day trading, that's not investing. If they increase their dividend, if they make public their goals, and/or if they get a new pay structure for the people at the helm, and they get conservatively on board with Pickens, and they are upfront a rewarding for long term holders, increases in dividends, they are a double. All those things are missing, so it is just a good bet, at 30. Stocks with debt are going down, stocks with no debt will pop up; like MSFT, or WMT, etc. oil stocks with no debt? I have no idea, maybe XOM, or PWE- if you can handle the tax basis change coming in 2 yrs.

I think CHK needs better management, but I never had lunch with any of them, so who knows what they are doing? I'll grap CHK with any incite, let me know where there going, and if you just stay with Pickens, well that's a good direction, but 2/3 of it is way long term, way beyond the man himself. All signs point to yes on a short term hop, look at AAPL chart, and 'take it on the hop', otherwise it's a company lost at the helm, no commitment, no disclosure, no direction.

I don't own CHK nor AAPL. I do have positions in WMT and MSFT. Hopefully you'll give some better incite of CHK.

by The Freshman |  09/29/08  |  Stocks: AAPL, CHK, MSFT, WMT,