Why Chesapeake Energy’s Shares Popped

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chesapeake Energy (NYSE: CHK  ) jumped 10% today after the company stripped founder Aubrey McClendon of his chairmanship.

So what: McClendon and Chesapeake have come under fire recently over issues including McClendon's ability to buy stakes in the company’s oil and gas wells and his use of those stakes to borrow more than $1 billion to pay for his stake in some wells. He will remain CEO, according to reports.

Now what: Analysts and investors are applauding the move, but I wonder whether it goes far enough and whether this is the last we’ve heard of this. Removing McClendon from his chairmanship is like a slap on the wrist if he is going to remain CEO. The relationship is still a red flag for Chesapeake, but with a P/E ratio of 8.6 and a 2% dividend, the stock is looking attractive enough to overlook this problem, especially if he is eventually ousted as CEO.

Interested in more info on Chesapeake Energy? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 01, 2012, at 4:51 PM, Clint35 wrote:

    I think this is just a token move the board has made to make it look they're doing the right thing. They need a new CEO and the entire board needs to be replaced with people that won't let the new CEO do whatever he wants. This board has been letting McClendon do whatever he wants for too long. I would stay away from this one no matter how cheap it gets. How do we know McClendon doesn't have another map collection that he wants to sell to the company.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1876033, ~/Articles/ArticleHandler.aspx, 10/23/2016 4:27:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CHK $6.68 Down -0.23 -3.33%
Chesapeake Energy CAPS Rating: ***