Will Chesapeake Be Icahn’s Next Project?

Will Chesapeake Be Icahn’s Next Project?

Will Chesapeake Be Icahn's Next Project?

Chesapeke Energy Corporation (NYSE:CHK) may have attracted some investors with a big interest in the company. Bloomberg reported yesterday that Carl Icahn may have acquired a stake int the company of up to, but certainly below, 5%. BlackRock Inc. (NYSE:BLK) had certainly increased its stake in the company to more than 4 million shares up from 1 million.

Earlier in the week we reported that T. Boone Pickens, the head fund manager and famous supporter of natural gas, had sold out of Chesapeake completely. That move may have shaken some confidence in the company. Pickens is a close friend of the CEO, Aubrey McClendon and has much invested across the gas industry.

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Chesapeake Energy Corporation (NYSE:CHK) has been one of the most interesting stocks to watch of late. It is the most public about the evolution of the gas industry, a sector whose saving grace, fracking, may have dropped prices so low as to kill the entire industry.

A position of 4% in Chesapeake would make Icahn the fourth largest holder of the company’s stock. His stake would be worth around $400 million though that has gone up since rumors of his involvement have put upward pressure on the firm’s share price. The company’s stock is trading at 15.87 today up almost 2% at time of writing.

Investors are not required to disclose their holding in a firm unless they own more than 5%. Bloomberg’s report relies on the testimony of someone close to the matter who sought to remain anonymous. It is likely, given Icahn’s history with Chesapeake, that he may very well have invested in the firm sensing opportunity.

The company’s annual meeting is set to take place on June 8. After recent performance problems and allegations of improper borrowing by the CEO Aubrey McClendon just two of the company’s 9 board members are seeking reelection. Icahn may sense an opening for his style of management at the company. It appears the markets agree.

If Icahn is indeed looking to get into the natural gas industry he could make waves. At them moment the commodities low prices have strangled its growth. Higher demand is needed though that requires greater infrastructure. Icahn’s involvement in Chesapeake could finally bring buoyancy to the industry and create a stable growth pattern.

Though perhaps not. Icahn may not be involved at all. If he is we will be sure to find out before the company’s meeting.

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