Thursday, January 6, 2011

Are We Seeing Carl Icahn’s Influence – Chesapeake Announces Plans for Debt Reduction -- GuruFocus.com

Our position on Chesapeake Energy (NYSE: CHK) remains the same. The stock is massively overbought. We have placed a sell/short sale recommendation on the stock and are targeting a $22/share price, which includes a speculation premium. We note that Morningstar values CHK at $18/share.

Current price level is well ahead of the Company's ability to generate cash flow per share in 2011 and 2012 given capital expenditure commitments, leasehold obligations, and capped prices due to forward sales through volumetric production payments (VPP's) and other hedges.Are We Seeing Carl Icahn’s Influence – Chesapeake Announces Plans for Debt Reduction -- GuruFocus.com

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