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$58.78 1.68 (2.94%)
5/16/2008 4:00 PM

Chesapeake Energy Corp (CHK)

CAPS Rating:
*****

An oil and natural gas exploration and production company engaged in the acquisition, exploration and development of properties for the production of crude oil and natural gas from underground reservoirs and the marketing of natural gas and oil.

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Recs

17

Avatar motherbird (< 20) Submitted: 2/02/08 2:34 AM : Underperform Start Price: $37.65 CHK Score: -53.63

Has all the makings of another ENRON.





Quarter after quarter the company dilutes shareholders equity with new debt and new shares issuances.





For a company that constantly reports great earnings, thier cash flow statement is a disaster.





With the excpetion of Mr.McClendon, managment is dumping its shares. Mr. McClendons share purchases are the only catalyst this company has going for it. Were he not buying, this company would be trading in the 20's. The level at which he is buying raises suspicions.





A huge red flag was raised when Tom Ward left the company stating he wanted to focus on his charitable work. Within a year Mr Ward starts his own company, Sand Ridge Energy (SD) and takes it public. Why would Mr. Ward give up the lucrative post he had at Cheasapeake to go start another company? Sounds eerly similar to Rich Kinder leaving ENRON and starting KINDER MORGAN.





Given the huge disparity between earnings and the cash flow statement, the continued dilution of the shareholder, the poor cash position, the recent insider selling (except Mr Mclendon), and the mysterious departure of Tom Ward, I would avoid Cheasapeake. Too many red flags.

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Avatar IUBOSS (< 20) Submitted: 4/04/08 1:53 PM

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From a brief glance at the Balance sheet, well said. Perhaps the increase in price is nothing more than energy hype..However, I haven't read the annual report or notes. I wonder if the capital they are raising is for development/exploration? Either way alot of implied risk..

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Avatar MDCigan (< 20) Submitted: 4/14/08 11:48 PM

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Well, time will tell, but IMO comparisons to Enron are way off in left field. I'm not sure what about the cash flow statement is a "disaster". The company is in growth mode so it won't have positive *free* cash flow, but operating cash flow is quite strong. I do believe the equity issuance is excesssive, but "quarter after quarter" is factually incorrect.

I'm not sure who is "dumping" shares. You've got normal amounts of insider selling. Executives diversify their wealth, and I'm sure they have expensive toys to buy from time to time. Which specific person is dumping their shares? The magnitude and regularity of McClendon's buying is simply unreal. If this is a "Enron" with no real tangible value, then McClendon is utterly insane given the amount of his personal wealth he has committed to the stock. Do you really believe that?

FWIW, I'm long big-time with real money. Are you short this with real money? Do you have that much confidence in your thesis, or are all your points just talk?

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Avatar MDCigan (< 20) Submitted: 4/14/08 11:57 PM

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One more quick thing. Look at the institutional ownership. Alot of highly successful value investors (like Longleaf) hold major positions.

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Avatar MDCigan (< 20) Submitted: 4/14/08 11:58 PM

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One more quick thing. Look at the institutional ownership. Alot of highly successful value investors (like Longleaf) hold major positions.

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Avatar MDCigan (< 20) Submitted: 4/15/08 12:00 AM

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One more quick thing. Look at the institutional ownership. Alot of highly successful value investors (like Longleaf) hold major positions.

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Avatar hirshey (98.42) Submitted: 4/15/08 10:04 PM

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I'd love to know what drugs you are on. Please inform me.

Chesapeake is a well-managed company where the executives have a large stake in the success and performance of the stock price. Part of the reason they possess lots of debt and little cash is because of their constant acquisitions of new shoals and drilling areas.

Natural Gas is the clean energy of the future (or at least one of them).

You score indicates your intelligence, or should I say...lack there of.

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Avatar sailinwind (89.18) Submitted: 4/18/08 2:24 PM

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I suspect he/she is NOT shorting CHK w/ real money. Just talk, I should hope. Otherwise, this person is not only another example of a lousy CAPS player, but also the kind of investor that helps the rest of us make REAL money!

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Avatar cashman07 (97.18) Submitted: 4/26/08 9:05 AM

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I'd guess your player rating and CHK score speeks volumes.

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Avatar mistrgolf (58.34) Submitted: 5/01/08 2:08 PM

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Well said, hirshey!

Not everyone understands finance and economics. A company needs to raise capital to expand and that is reflected on the cash flow statement. A poorly run company has a mountain of cash on the balance sheet and a well run company invests their excess cash to increase shareholder value. Duh!

Motherbird wants to trash CHK, yet hasn't rated any other company. Sounds much like a typical ex-employee or someone with an axe to grind.

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Avatar jmkreger22 (77.33) Submitted: 5/02/08 2:19 PM

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Chesapeake Energy is the only co drilling on the barnett shale which is garenteed to bring in 8 billion over the next 7 yrs

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Avatar bluedome (89.76) Submitted: 5/14/08 5:39 PM

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Better bear argument: lost money last quarter, and selling at 30x earnings, had a good runup

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