Carl Icahn Increases Steak in Struggling Chesapeake Energy Corp.
Carl Icahn, billionaire activist investor, increased his stake in Chesapeake Energy Corporation (NYSE: CHK) for the first time in two years. The natural gas and oil company has been struggling due to falling oil prices and many investors have turned bearish on the stock.
On March 11, Icahn purchased 6.6 million shares of CHK for $14.15 between High River LP, Icahn Partners LP, and Icahn Partners Master Fund LP. This transaction increases Icahn’s stake in the energy company from just shy of 10% to 11%. He is second largest shareholder with 73.1 million shares behind Southeastern Asset Management Inc. with 76 million shares. The transactions were filed with SEC on March 23.
Chesapeake Energy lowered its 2015 capital budget from $4-$4.5 billion to $3.5-$4 billion. Additionally, the energy company announced revised plans to operate 25 to 35 rigs in 2015, a significant decrease from the 64 rigs operated in 2014. CEO Doug Lawler commented, “In response to continued weak commodity prices, we are further reducing capital expenditures and associated drilling activity… With this budget revision we anticipate being free cash flow neutral by the end of 2015.”
Out of the 172 insider transactions Icahn has made in the past year, 87% of them have been profitable. The activist investor has a +46.5% average return per transaction.
The top analyst consensus on Chesapeake Energy on TipRanks is Moderate Sell.
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