NEW YORK ( TheStreet) -- After winning seats on Chesapeake Energy's ( CHK) board in June, the company's largest investor Southeastern Asset Management is adding to its bet on the embattled oil and gas driller. Southeastern Asset Management, run by Mason Hawkins, bolstered its leading stock position in Chesapeake by roughly 3.5% in the second quarter, buying up roughly 3.12 million shares, according to Securities and Exchange Commission filings compiled by Bloomberg. The share increase puts Southeastern's stake in Chesapeake Energy at nearly 90 million shares, or roughly 13.5% of the company, according to SEC filings. Southeastern's additional buying may be seen as a vote of confidence in the Oklahoma City-based driller. Hawkins, who had more at stake than any other Chesapeake investor even before his second quarter buying, argued as Chesapeake shares were dumped earlier this year that there was significant value to be realized in Chesapeake's assets. Hawkins also reclassified his firm as an activist investor at the time that Chesapeake shares bottomed out. Investors are also likely to watch whether Carl Icahn, a new Chesapeake shareholder who recently gained a board seat after taking a 7.5% stake in the company worth $1 billion, also follows suit in adding to his stock position. In late 2010, Icahn built a position in Chesapeake shares as the stock hovered in the low $20s and talked up his ability to drive change at the company, only to sell out of shares quickly after a rapid rise in value. Chesapeake shares have risen from a May low near the $13 mark -- which triggered a new round of Icahn buying -- to over $19. Icahn recently said in response to a question during a CNBC interview that even after the rebound in Chesapeake shares it was not time to sell. In Tuesday trading, Chesapeake shares rose slightly to $19.10. The stock has gained over 20% from levels that UBS analysts calculate Icahn bought Chesapeake Energy shares at in May. Year-to-date shares are off over 14% and nearly 40% in the past 12 months, amid concerns about its balance sheet, loans taken out by CEO McClendon tied to a 2.5% personal investment in wells that the company has drilled over the years, a federal investigation into allegations of price fixing in land acquisitions made by Chesapeake and rival Encana, as well as the decline in natural gas pricing to a level that remains uneconomic for many drilling companies. In June, Southeastern and Icahn's activist campaign led to a reshaping of Chesapeake's board, highlighted by the separation of co-founder Aubrey McClendon's CEO and chairman role. In the overhaul, McClendon was replaced as chairman by former ConocoPhillips ( CHK) chair Archie Dunham, but maintains his chief executive role. Chesapeake Energy also elected four other independent members to its nine-member board of directors, including three proposed by the company's largest shareholder Southeastern Asset Management and one proposed by Icahn. Those elections and Dunham's replacement of embattled CEO McClendon as chairman came as a quick response to Southeastern and Icahn's calls for drastic change that will help Chesapeake better manage its finances as a cash crunch looms. When Chesapeake announced its board overhaul, Carl Icahn said, "Chesapeake is now heading in the right direction. With the Board providing strong oversight, the management team will be sharply focused on realizing the value of its assets and the company will be well positioned to create substantial value for shareholders going forward," in a June 21 statement. Chesapeake Energy's second quarter earnings, released on Aug 6, were marked by improved forecasts surrounding the company's asset sales and reduced spending plans. The company, which is the second-largest natural gas producer in the U.S., said in June it would sell its stake in Chesapeake Midstream Partners to energy investor Global Infrastructure Partners for $4.08 billion and said in second quarter earnings it would sell some Permian Basin assets to EnerVest -- a common buyer of Chesapeake assets -- for an undisclosed price, in addition to two other Permian deals it plans to announce in the coming months.
The company expects $7 billion in divestitures during the third quarter, helping to propel overall 2012 asset sales to over $14 billion. Those sales are seen by analysts and ratings agencies as key to the company's outlook and have been a key management benchmark for most of 2012, as revelations about CEO McClendon's personal dealings and federal investigations into the company's operations cloud its outlook. Meanwhile, Chesapeake's core operations also are showing signs of strength as natural gas rallied throughout 2012 after hitting a near decade lows at the beginning of the year, and its production from liquids -- natural gas liquids and oil -- continues to rise. While the recent rise in Chesapeake shares reflects efforts to repair its finances and corporate governance, and the reversal in the natural gas trade, investors and analysts are awaiting key events in the second half of 2012. In second quarter earnings, McClendon maintained his confidence in Permian asset sales but said a Mississippi Lime joint venture could be deferred until 2013. McClendon also said the company would dedicate its oil and gas focus to just 10 basins, after previously embarking on a "land grab" of shale drilling assets across the U.S. A shoring up of the balance sheet will remain a key focus for the oil and gas company in 2012. Moody's calculates the company needs to sell $7 billion in assets in 2012 to avoid a ratings downgrade and a breach of its debt covenants. In the second quarter, Southeastern also bolstered stakes in Consol Energy ( CNX), Warren Buffett-run Berkshire Hathaway ( BRK.A) and opened a $100 million-plus position in insurer Leucadia National ( LUK ), according to an Aug. 14 13F filings with the SEC. For more on Carl Icahn, see his investment portfolio. For more on energy stocks, see the energy stocks bought and sold by hedge funds in the latest quarter. -- Written by Antoine Gara in New York