4. Chesapeake Energy Corporation (NASDAQ:CHK)
Number of Hedge Fund Holders: 67
YTD Share Price Gain as of September 15: 73.96%
Chesapeake Energy Corporation (NASDAQ:CHK) is an independent exploration and production company that distributes oil, natural gas, and natural gas liquids from underground reservoirs in the United States. Chesapeake Energy Corporation (NASDAQ:CHK) reported on August 2 market-beating Q2 results, with a GAAP EPS of $8.27 and a revenue of $2.79 billion, exceeding Street predictions by $4.40 and $22.40 million, respectively. Chesapeake Energy Corporation (NASDAQ:CHK) stock has climbed about 74% year to date as of September 15, making it one of the best performing energy stocks of 2022.
On August 1, Benchmark analyst Subash Chandra initiated coverage of Chesapeake Energy Corporation (NASDAQ:CHK) with a Buy rating and a $137 price target. The company has emerged from bankruptcy to pursue a long-term return-of-capital model “that is not fully appreciated in the company’s discount multiple to the E&P sector,” the analyst told investors. Chesapeake Energy Corporation (NASDAQ:CHK) has purchased assets worth $5 billion in the last six months that have advanced the company’s capital intensity and require “proportionately less capital to maintain higher production volumes”, the analyst added.
According to Insider Monkey’s Q2 data, 67 hedge funds were bullish on Chesapeake Energy Corporation (NASDAQ:CHK), up from 59 funds in the earlier quarter. Howard Marks’ Oaktree Capital Management is a leading position holder in the company, with 10.5 million shares worth $851.6 million.
Here is what ClearBridge Investments Dividend Strategy has to say about Chesapeake Energy Corporation (NYSE:CHK) in its Q1 2022 investor letter:
“In the early days of the invasion, we made two measured changes to the portfolio based on longer-term fallout we anticipate from Russia’s invasion of Ukraine. First, we initiated small positions in U.S. natural gas producers Chesapeake (NYSE:CHK).
Given its superior environmental profile compared to other fossil fuels, we have long favored natural gas in our energy holdings. Combustion of natural gas releases 50% less CO2 than coal, 25% less CO2 than gasoline and dramatically less particulate and pollution, per the U.S. Energy Information Administration. With the advances in shale production this century, the U.S. has become a natural gas powerhouse with some of the lowest-cost and largest reserves in the world. But because natural gas is difficult to ship across the ocean (it must be liquefied, which requires expensive infrastructure on both ends of the voyage), America’s gas bounty has ironically proved a burden for U.S. producers.
The surplus of natural gas in North America has resulted in low prices and weak earnings for gas-focused producers. Exports, while growing, are restrained by the high cost of building export infrastructure. Europe, in a Faustian bargain, has relied on abundant, inexpensive Russian gas transported by pipeline.
Despite the abundance of low-cost resources and a superior environmental profile, the investment case for U.S. natural gas producers was previously unfavorable due to oversupply in the domestic market.
In the days preceding the invasion, we were quick to realize the war would change global energy flows. Europe is shifting away from Russia and toward new sources of imported liquified natural gas. We purchased our stakes in Chesapeake to capitalize on these trends. The recently announced energy pact between the U.S. and Europe represents an early positive datapoint in support of this investment thesis.”
