Chesapeake Business Practices

[OkiePoke]

Does this constitute good news?

Chesapeake reports $4.1 billion second quarter loss | News OK

That is just a devaluation of their assets. Look at Devon's report. What is important is the earnings.

[okatty]

Check out the volume on the stock today. Off the charts. Someone dumped a bunch of shares around 10 am.

[OU Adonis]

I am going to buy if the stock goes below 7.

[okatty]

Was over 21 less than 6 months ago. Lost almost 2/3 of that as we sit today. When it was around 10 two weeks ago looked like a decent buy and now has lost 25% of that. 2 Mill shares just traded in 10 minutes.

[OU Adonis]

Was over 21 less than 6 months ago. Lost almost 2/3 of that as we sit today. When it was around 10 two weeks ago looked like a decent buy and now has lost 25% of that. 2 Mill shares just traded in 10 minutes.

The Street rates it as a "Sell".

[okatty]

Needless to say a very interesting day in regard to CHK stock! Wow.

[OU Adonis]

Needless to say a very interesting day in regard to CHK stock! Wow.

Its down almost 10% Crazy.

[Jersey Boss]

I am going to buy if the stock goes below 7.

Closed at 7.03 today.

[okatty]

What a hell of a day! Volume of almost 57 million. Got as low as 6.85. Down over 12% (IN A DAY). I really thought that $8 trade yday was a good one..haha

[OU Adonis]

What a hell of a day! Volume of almost 57 million. Got as low as 6.85. Down over 12% (IN A DAY). I really thought that $8 trade yday was a good one..haha

And I didn't see it go below 7. I should of bought.

[Just the facts]

That reminds me of this.

[gopokes88]

What a hell of a day! Volume of almost 57 million. Got as low as 6.85. Down over 12% (IN A DAY). I really thought that $8 trade yday was a good one..haha

In the long run it might still be a good trade.

[king183]

I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking. Hoping for a buy out, maybe?

I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.

[PhiAlpha]

I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking. Hoping for a buy out, maybe?

I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.

Because even at $45 oil their physical assets are worth a good deal more than the stock price is giving them credit for, the company has generally made a huge turn around over the last 2 years, and at under $8 a share you can buy a lot without spending too much money. CHK still has one of the best asset bases in the country even after the asset sales and it is massively undervalued. I don't think anyone buying CHK right now is making a short term investment (outside of those that hoped to buy low yesterday and sell high on good news today). If you share in the general consensus that oil and gas prices will increase over the next few years, then CHK is a pretty good investment at $7.00.

On oil prices, no one really seems to know what they are going to do, but I doubt we are stuck under $60 and definitely not under $50 long term. That of course depends on what you consider long term. There are a lot of variables at play, but US production will start falling quite a bit if we experience prolonged sub $50 prices.

[okatty]

The news today wasn't bad - it was pretty much as forcasted except revenue was somewhat lower. There were some HUGE institutional sales following the call for whatever reason. You don't see 20-plus million in volume on a stock like CHK prior to 10 AM CST very often.

[gopokes88]

I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking. Hoping for a buy out, maybe?

I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.

Because none of that has anything to do with their stock price.

Ok that's not technically true, but still. Stocks very rarely behave rationally. Tesla is worth as much as GM despite having a fraction of the sales, never turning a profit and they gave away all their patents on their technology. If stocks behaved rationally tesla wouldn't even be listed, but they don't and tesla is super expensive. (I do understand why, don't get me wrong but if it was purely dollars and cents tesla is expensive)

Second is because people get into the trap that most investors get into. They sell on bad news because it's bad news and they buy good news because it's good news. It's easy to say buy low sell high but it's much tougher to do in practice. Because if a stock is low there's a reason it's a low and it's hard not to be emotional about the low. Kinda like you are right now. You gave a few reasons why no one should buy because it's so bad right now, but by the time there is good news you'll be too late to the party. CHK is cheap right now expectations are near zero and any positive news the stock is going to pop.

[okatty]

^ I hope it pops like a dad-gum weasel!

[gopokes88]

^ I hope it pops like a dad-gum weasel!

It will. Why and when are different story. They aren't going under so that's not a concern unlike SD. It'll pop because nothing goes up/down forever or a buyout offer. Given how down the stock is, it would take a nice offer to get shareholders to sell.

[blangtang]

I don't understand why someone of you are talking about buying their stock at this point, but maybe someone can explain their thinking. Hoping for a buy out, maybe?

I don't see their fundamentals changing anytime soon. Oil and natural gas prices aren't going up anytime soon unless there is a crisis and the national and global economy is weak. Nothing about CHK indicates an improvement in their position. I know many in the industry expected oil to pop back to $70-80 at the end of the year, but that's looking to be too optimistic. We're probably stuck below $60 for the long term; maybe below $50.

Maybe its home-town homerism, or local pride? I remember living in Tulsa in the dot com bubble and people were loading up on Williams (WMB) and one of their hot communication spinoff stock, williams communication group.

Full disclosure: I don't work for the energy industry.

[okatty]

^ It may be something related to local interest or the fact it is followed more closely than a company from somewhere else, but not local pride. You can argue the pros and cons of stocks like CHK but there is no doubt there is plenty of things you can point to (as have been noted above) to say it makes sense to buy it at what appears to be a very low price in relation to their asset base, etc. You can argue the other side too, but it has nothing to do with pride in my view. If I thought the right play was to short it I would do that too.

[jn1780]

Maybe its home-town homerism, or local pride? I remember living in Tulsa in the dot com bubble and people were loading up on Williams (WMB) and one of their hot communication spinoff stock, williams communication group.

Full disclosure: I don't work for the energy industry.

Money can be made as a stock bounces up and down. Money can be made in the long run too when things recover.

[king183]

Because none of that has anything to do with their stock price.

Ok that's not technically true, but still. Stocks very rarely behave rationally. Tesla is worth as much as GM despite having a fraction of the sales, never turning a profit and they gave away all their patents on their technology. If stocks behaved rationally tesla wouldn't even be listed, but they don't and tesla is super expensive. (I do understand why, don't get me wrong but if it was purely dollars and cents tesla is expensive)

Second is because people get into the trap that most investors get into. They sell on bad news because it's bad news and they buy good news because it's good news. It's easy to say buy low sell high but it's much tougher to do in practice. Because if a stock is low there's a reason it's a low and it's hard not to be emotional about the low. Kinda like you are right now. You gave a few reasons why no one should buy because it's so bad right now, but by the time there is good news you'll be too late to the party. CHK is cheap right now expectations are near zero and any positive news the stock is going to pop.

Most of us are well aware of the role emotion plays in short-term stock pricing; but I'm not talking about short-term pricing. I'm talking about the long-term price, which will, in fact, despite your opening sentence, be set by the company's fundamentals. I'm also making the assumption that people who boosting the stock on this board are buying it to hold it, not wait for a pop to sell for short-term gain. Maybe that's a faulty assumption.

My argument is that there is little in the CHK fundamentals to suggest their business will turn around, primarily because I don't believe oil or gas is going to make meaningful move upward for a long time, thereby resulting in lower earnings and cash flow and hurting their ability to pay down debt. CHK has already eliminated dividends and they're looking to sell more valuable assets to preserve cash holdings and we'll probably see limited layoffs before the end of the year.

The counter to that argument is that 1) oil could easily go up in a meaningful way if any number of events occur, including the Saudis deciding they've played this game of chicken too long and don't want to continue to deplete their cash reserves, which they're burning through rapidly; 2) CHK's book value is strong given their underlying assets, so if they were sold, you'd get much more than $7-8 return per share; 3) CHK has taken measures to prepare themselves for this type of depressed price environment by strategically selling assets to reduce liabilities and increase cash on hand, allowing them to "weather the storm" better than some of their competitors and, therefore, being in a position to succeed if oil and gas prices gain support.

[gopokes88]

Most of us are well aware of the role emotion plays in short-term stock pricing; but I'm not talking about short-term pricing. I'm talking about the long-term price, which will, in fact, despite your opening sentence, be set by the company's fundamentals. I'm also making the assumption that people who boosting the stock on this board are buying it to hold it, not wait for a pop to sell for short-term gain. Maybe that's a faulty assumption.

My argument is that there is little in the CHK fundamentals to suggest their business will turn around, primarily because I don't believe oil or gas is going to make meaningful move upward for a long time, thereby resulting in lower earnings and cash flow and hurting their ability to pay down debt. CHK has already eliminated dividends and they're looking to sell more valuable assets to preserve cash holdings and we'll probably see limited layoffs before the end of the year.

The counter to that argument is that 1) oil could easily go up in a meaningful way if any number of events occur, including the Saudis deciding they've played this game of chicken too long and don't want to continue to deplete their cash reserves, which they're burning through rapidly; 2) CHK's book value is strong given their underlying assets, so if they were sold, you'd get much more than $7-8 return per share; 3) CHK has taken measures to prepare themselves for this type of depressed price environment by strategically selling assets to reduce liabilities and increase cash on hand, allowing them to "weather the storm" better than some of their competitors and, therefore, being in a position to succeed if oil and gas prices gain support.

I'm not trading short term I hate short term cap gains tax. I don't play with enough money it's not worth the big tax.
4.) despite the fundamentals it is in oversold territory.
5.) CHK stock has always been a roller coaster. It may be hard to predict the bottom but it's easier to know when it's cheap.

You have to buy on bad news and sell on good news. Right now things look bad for CHK, hence why the share is in the $7s. Right now is when the pros start loading up. Carl Icahn is famous for doing this.

Trading just on fundamentals you should look more towards industries that don't have as much voliatity. That creates fear which distorts the price. Just like you wouldn't trade tesla on fundamentals. You trade consumer products, medicine, etc. things that typically don't have as much swing in prices.

[king183]

Trading just on fundamentals you should look more towards industries that don't have as much voliatity. That creates fear which distorts the price. Just like you wouldn't trade tesla on fundamentals. You trade consumer products, medicine, etc. things that typically don't have as much swing in prices.

Ahh, now that's what I was looking for. Good point.

What primarily concerns me for our energy companies is the possibility for a long term (at least 2 years) depression in energy prices because of a weaker-than-expected global and national economy. Perhaps I'm giving too much weight to the downside forces, though.

[ou48A]

A decent case can be made for higher NG prices in the next 3 to 5 years…. that should help CHK stock price…
As cheap as CHK is now the odds of a hostile takeover or buy out have increased.