Icahn sees growth in Chesapeake Energy

BillionaireTimes.com recommended to buy Chesapeake Energy on Nov. 25, 2010 (See Stock Picks) after reporting Chesapeake’s dealings with Reliance Industries on Sept. 19, 2010 (Go to Story)

Monday, Dec. 20, 2010 Carl Icahn, billionaire and activist for stockholder rights, doubled his interest in Chesapeake Energy (CHK). Carl Icahn already owned 16.6 million shares of CHK, and now owns 38.6 million shares. Icahn’s earlier purchases were of common stock but today’s purchases were preferred stocks. Increasing his holdings from 2.5{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} of the company to 5.8{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932}, positions Carl Icahn as the second largest shareholder of Chesapeake Energy.

Chesapeake Energy shares rose $2.06 in response to the Carl Icahn’s substantial investment of $500 million in the company, which he announced late Friday Evening. This is an 8.8{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} increase as Chesapeake Energy closed at $25.36.

Chesapeake Energy, based in Oklahoma City, is the second largest natural gas producer in the U.S. and has substantial interest in crude oil as well. They have recently liquidated $3.8 billion in assets in order to invest more in oil production. This was a hedge against dropping natural gas prices which are down 35{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} due to a recent oversupply. Crude prices are 16{3291cb1bf4fd73bca8d404e832e186cbc6f97ddc4c21a45f51320a1dbbde3932} above the previous five year average, so Chesapeake Energy has been investing more in the oil market this year.

Carl Icahn is one investing billionaire who is accustomed to taking leadership roles in the corporations he holds stock in, stated that the stock was “undervalued” and the price of stocks should be increased. Carl Icahn takes a very active role in most of his investments. The billionaire activist is currently chairman of Imclone, Icahn Enterprises, XO Communications, WestPoint Home, Cadus, and American Railcar Industries. Until January of 2010 he was the director of Blockbuster.

Billionaire activist Carl Icahn will undoubtedly take an active role in oversight of Chesapeake Energy. Jeff Mobley, senior vice president of Investor relations at Chesapeake Energy said, “We have met with Carl on several occasions, as recently as Friday afternoon.” As Jeff Mobley welcomes billionaire Carl Icahn into his company they will no doubt be discussing plans even more frequently.

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