When Carl Icahn decided to invest in Chesapeake Energy Corporation (NYSE:CHK), many employees would have thought that the company is doing very well. Only the best companies attract billionaires who do their homework before putting their money in an investment and Carl Icahn is a highly respected fund manager in the industry. The billionaire has taken up 7.6% of Chesapeake shares; an action that was followed by a recommendation for the dismissal of four directors. As of right now, Mr. Icahn has only recommended the departure of four directors, however it is expected that further changes will come soon.
Chesapeake, with a market capitalization of more than $10 billion has a trailing twelve-month profit margin of 15.08% and pays an annual dividend of $0.35 per share. This represents a forward annual dividend yield of 2.30%. It is obvious that Icahn want more than $0.35 dividend per share and this is why he is making these recommendations.
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Chesapeake is a stock to watch because Icahn is not the only investor to put money in the company in recent past. Others like Black Rock, Inc. (NYSE:BLK) have also increased their stake in the company. T. Boone Pickens is a close friend to the CEO Aubrey McClendon and is also thought to have some interest in the energy company.
Following the news, the company today rose 1.83% to trade at around $16 per share with an average 10-day trading volume of over 41 million shares from a possible 636 million. This comes out to be about 8% liquidity within 10 days. We can only wait and see how far this news will rally the company stock with the uncertainty of oil prices amidst increasing value of the dollar.