It just dilutes the number of shares, but lowers your cost basis. All shareholders are in the same position they were before. So...what is the point of it? there must be a reason...
I don't really know much about CHK. I know it is involved in NG and oil (mostly NG). I know it is generally seen as a leader in its field. Not sure why, because I don't know how to analyze oil and gas companies. What I do know is they have a piece of crap CEO. However, the stock is very cheap, and beats earnings often. I think for the short term there will be nothing but bad news flow. Funds forced to sell it, SEC probes, other people saying what kind of messed up stuff he has done, etc. This will all beat the stock down heavily. It's already down over 20% since the scandal broke out. If it drops another 10-15%, to a total of 35% all based on the scandal, I will watch for a catalyst. Maybe the board will get rid of him. Maybe his pay will be restricted. Let us not forget what he did, didn't negatively impact earnings, it was just stupid. if there is a move made that would severely reduce the chance of him screwing the company in the future, then most if not all of that 35% would jump back over time. [more]
Sometimes, I hate when I think too deeply into theory behind stock value. Usually when I buy a company, it is cheap based on P/E, cheaper P/E than worse companies in the same sector, a very good company I think is in secular growth so I don't have to do a ton of analysis, a best of breed stock, or a stock where I think whatever caused the sell off is only 1/2 or less as bad as everybody else thinks. Stocks make more sense logically...they produce, while bonds dont. [more]
I know all of the differences, but I would like to hear which you fools like, and why. [more]
Some discussion on a few topics that have my interest. As usualy, I question convential wisdom (I am a skeptic by nature, what can I say) [more]
Stocks seem to be trading independent of each other, which is healthy. I see a lot of cheap names out there. Here are a few. Please, poke as many holes in my argument as possible: [more]