NEW YORK (TheStreet) -- You don't have to look too hard to find cheap oil-related stocks these days, given the punishment energy companies have taken so far in 2015. But if you're thinking about placing a long bet on Chesapeake Energy (CHK), smart money suggests that you shouldn't.
Sure, crude prices have begun to rebound, but companies that depend on the exploration and production of oil and gas have been forced to reset their businesses to assume lower oil prices going forward -- a painful "new normal" that energy executives must adapt to. The chance that all of these business will succeed -- beyond consolidation -- is not great.
It's in this context that short sellers are betting against Chesapeake Energy: They believe that the Oklahoma City, Okla.-based oil producer will be one of those that fails in its attempt to stabilize its business. If the bears are right, they stand to make lots of money. The question is: Should retail investors follow suit. And if so, at what price?
As you can see on the chart below, Chesapeake stock closed Wednesday at $15.23, down 1.42%. Already, Chesapeake investors are down more than 22% in 2015, grossly underperforming the 1.54% gain in the Energy Select Sector SPDR ETF (XLE). And you've bought and held CHK over the past year, you're down 45%, against just 13% declines for the XLE. (CHK was down again Friday, trading at 14.71 mid-morning in New York.)