NEW YORK (TheStreet) -- Chesapeake Energy (CHK) may be one of the greatest short-term trades an investor can make, but that's because it continues to be such a frustrating idea as a long-term investment.
Chesapeake Energy does so much wrong -- at least as far as Wall Street and investors are concerned -- that any time it makes good on a promise or an unexpected catalyst emerges -- the stock rallies. Those pops usually come right after the shares have hit a low-water mark, making Chesapeake Energy shares ripe for a quick profit. Any more than a quick hit, though, and an investor is asking for a lot out of a stock that continues to bounce around and seems to always come back to at least the low-$20s.
|Chesapeake Energy has been a dry hole for long-term shareholders.|
Consider these three recent examples.
In 2010, longstanding balance sheet concerns about Chesapeake -- its appetite for land acquisitions relative to a mounting debt pile -- kept the company's shares in the low $20s. In December 2010, activist investor Carl Icahn came out of nowhere to disclose a significant stake in the company. In the three months after that news broke, Chesapeake shares rose as high as $35, as the market bet the Icahn would finally get Chesapeake Energy CEO Aubrey McClendon "into line."Hardly. Icahn took his short-term payday and got out of Chesapeake. Chesapeake did announce a plan to significantly reduce debt after Icahn's investment, a plan it says it is sticking to this year. However, shares ran from the $35 mark right back down to the low $20s. In July 2011, Chesapeake shares returned to $35 or so after the company said it valued its Utica acreage -- which it planned to find a joint venture partner for - at $15 billion to $20 billion. That spike didn't last long either: Shares went the way of all Chesapeake Energy trading spikes and back to the low-$20s by November. Chesapeake shares began trading 2012 in the low-$20s, and already this year the stock has experienced two mini-rallies, though nothing like the "heyday" of its $35 share price.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV