CHK

[cumulina]

This morning I bought CHK at $29.62

Chesapeake Energy Corporation. The Group's principal activities are to acquire, explore and develop properties for the production of crude oil and natural gas. It operates in two segments: exploration and production, and marketing. Exploration and production includes production of crude oil and natural gas from underground reservoirs. Marketing segment provides marketing services, including commodity price structuring, contract administration and nomination services. The Group markets natural gas and oil to purchasers under percentage-of-proceeds and percentage-of-index contracts or by direct marketing. The major properties are located in Oklahoma, Texas, Arkansas, Louisiana, Kansas, Montana and Colorado. In Jan 2004 the group acquired Permain Basin, Mid-Continent oil and gas assets from Concho Resources Inc and South Texas gas assets.


It showed up on my search for recent insider trading, and as I am right now into energy (both traditional and alternative   ) it was a "must have".

[catrader]

anothe good pick here culumina, thinking of a jan 06 35 call option for 2.95.  culumina, your graph gives you a target?  Apc migh be another play in the sector as it has lower pe than chk.

[cumulina]

APC looks good - but as I'm just a small fish, I'll have to stick to smaller stock. It would look silly for me to buy 7 APC, wouldn't it? 

My strategy for CHK is more or less like what I l learned on this site: stick with it as long as it keeps above the 50MA.

Nice, simple - and profitable! 

Good luck to you.

[REALDEALS21]

Closed at an all time HIGH ! Strong day for the stock !

[cumulina]

I'm still holding CHK - and I will not let go of this winner. 

Need to post an updated chart. 

[cumulina]

This past month has been a rough one for CHK!

For some reason it is traded very close to the rise and fall with the price of Natural Gas - well, maybe that is logical, but this company has been foresighted enough to make sure, that they'll have enough gas for years to come. During the recent C/C it was mentioned that even if they are "only" the 3rd. in the US, they believe that they have the largest rescources!

I have shamelessly copied this from the otherwise very tiresome yahoo-board. It made the tiresome wading trough stupid and abusive posts there worth my while. I hope the two guys don't mind being quoted here:


I culled the following information from the below link:

http://library.corporate-ir.net/library/10/104/104617/items/172135/NovemberPrese ntation_05.pdf

2006 earnings per fully diluted share at a range of NG spot prices:

@ 7.00 NG = $2.67
@ 9.50 NG = 3.54

Based on todays's close price of $29.04, the p/e's based on CHK income projections:

@ 7.00 NG = 10.87
@ 9.50 NG = 8.20

The above information takes into account the CNR debt and income generation.

Do you see how their hedging strategy negates the effect of a severe drop in spot prices?

Do you see how oversold this stock is based on p/e?
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øI read your excellent 208625 post. The reasons you pointed out are partially why this is the only Stock I have averaged up in, in years. While we have high storage at present, we do not have capacity to increase production once this same storage is burned off. The secular bull market in ng remains, regardless of what happens in the short term.

Current futures chain is now neutral through 2005 with a .40 storage cushion, turning bullish in 2006, when accounting for normalized seasonality. Even with this huge sell off, the Spring floor remains historically high at 9.74. Re the high storage, some of it is merely a math game, in that previous baseline gas was this summer, recalculated and now is counted as working gas. (the LDCs are running on less pressure and their less storage facilities) So, at least for this portion of the current storage stats, there is actually no new gas. Also, the API average of oil has been steadily increasing since 2004, meaning oil production is becoming "heavier" by the day.(this is why the crack spread and WTI/DUBAI spread was so high all summer) WTI is becoming rarer and rarer each year.

We have been very lucky since 2003, re weather and other factors. But, sooner or later, this working gas will be burnt off. Production is flat to declining, while demand steadily goes up in a manner that is endemic, and simply not amenable to traditional demand destruction. I have no idea where CHK will be a week or two from now, and I really do not care. But I feel very confident that it be significantly higher in good time. These day traders are tiresome. The shorts can happily count their pennies, having fun while they can. Thanks again for your very informative post. Syl
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øGreat post Syl. Thank you.

I was listening to the conference call again as I typed that post.

I am certainly no NG expert (very far from it), but I am able to get my head around the concept of hedging quite well. Aubrey expressed some frustration that most of the investment community cannot grasp hedging concepts. I have the same frustration in a way. I know this board does not make any difference in the price of the stock, but I am afraid that the sentiment sometimes expressed here of "CHK price will fall because NG price will fall" may be prevalent in the investment community for energy stocks in general.

As a result, the severe volitility in the stock price, which I believe is mainly a function of NG spot prices, tends to drive me up a wall.

In any case, I am all in at 32, and I will hold. Like I said, I am no expert, but I have researched everything I could get my hands on and I feel very comfortable in owning this stock.

Thanks again for your post, you are a voice of reason.

Have a good weekend.

øend of quote.


I see that puenthouse made CHK his pick for the contest on 3sof. 
Very well done indeed, puenthouse! You'll get the stock monday for the contest at a rediculous bargain price, and winter is sneaking in - I think you will do well! 

[fill_the_gap]

I purchased quite a bit of CHK Friday on the 2 % pullback.

Here is a link to Aubrey McClendon's & Tom Ward's recent insider buys.
Is seems to be 20 million dollars worth.
See December 14th in particular.

Aubrey, being the CEO, should know more than the public.   
I like that they buy on the open market.

http://finance.yahoo.com/q/it?s=CHK

Mid-Long term hold.  They seem hedged from here if Natural Gas falls.  The acquisition strategy has worked so far.  The shortage is not going away regardless of NG pricing near term.

[cumulina]

I'm still holding.

Very long term! 

Cheers.

[Melf Elf]

cumulina,

Applause for your work on CHK.

Bullish hammer yesterday at the 50DMA, which also puts in the bottom of a possible Symmetrical Triangle.  Looks like it wants to rally.  I keep hearing reports on CNBC of Insider Buying.

Good luck with your position!

EDIT:  Applause to Jeff (fill the gap) for the Insider Buying info.  Thanks.

[calven]

BIG SYMM TRIANGLE - BUY on a break of the top resistance line....

[Melf Elf]

6+ month Symmetrical Triangle (pattern in black) BREAKOUT.   Gapped up yesterday, and broke out on the print of 32.67.  Closed at 32.80.  Volume was "just okay."

Yesterday's gap is 32.17-32.34.  There's also a little gap at 31.66-31.67, from Monday's open.

I mentioned CHK in the ALTI folder this weekend.  The patterns within patterns within patterns have been tricky, but I like this breakout of the major Symmetrical Triangle.  I also like the insider buying that occurred in January in this $32.00 range (see bottom of chart).

P/E ratio basis this year's and next year's estimate is under 10.  Quarterly dividend is five cents.

[Melf Elf]

Here's the Symmetrical Triangle breakout on the Ichimoku Kinko Hyo chart, without all of the smaller patterns shown in the post above.   CHK had some upside follow-thru yesterday.  Only average volume, but the breakout looks good, so far.

[Melf Elf]

6+ month Symmetrical Triangle (pattern in black) BREAKOUT.   Gapped up yesterday, and broke out on the print of 32.67.  Closed at 32.80.  Volume was "just okay."

Yesterday's gap is 32.17-32.34.  There's also a little gap at 31.66-31.67, from Monday's open.

Bought CHK at 32.12 on the gap fill.  Stiop: below the March 31 low of 30.87, prior to the breakout.  Risk: a loss of 3.9%.

The volume on the breakout was "just okay," and CHK has been sloppy in the formation of the 6+ month Symmetrical Triangle, but it looks like it should go higher.

CHK currently is BID 31.97....ASK 31.98

[cumulina]

Glad to see you as a fellow CHK-owner, Melf Elf. 

My own average price is 32.59,  and that's a couple of "dips" ago. But I'm stubborn with this one.

You buy on technicals only?

Cheers.

[Melf Elf]

Glad to see you as a fellow CHK-owner, Melf Elf. 

My own average price is 32.59,  and that's a couple of "dips" ago. But I'm stubborn with this one.

Oh good, cumulina, we can be trading buddies on this one!    

There was a lot of insider buying in the 32.00s in January, near your average cost.  With the price of oil so high and with a P/E of only about 8 or 9, I'm surprised that CHK didn't break out sooner than it did (April 18).

CHK closed right where I bought it, at 32.12 and it's back below the big Symmetrical Triangle breakout near 32.60, so our upside targets go ON HOLD unless/until CHK goes back above 32.60ish. 

There's another little gap at 31.66 - 31.69 from April 17 that might need to get filled here.  It's hard to see it on this chart, but it's where I put a Black Arrow (not to be confused with today's gap fill, signified by the red arrow).

Below that gap, we've got the "prior low" at 30.87 on March 31 (the pattern in brown) and the 50/200DMAs, which all come in right there at that price.  If all of that support gets broken to the downside by much more that a tick or two intraday, I don't want it.   After the breakout of the Symmetrical Triangle, all of that support "should" hold.

You buy on technicals only?

Yes.

Good luck to us!