Insiders Giving Strong Vote of Confidence to Chesapeake Energy (CHK) And These 2 Companies

An operator of company-branded hotels, Extended Stay America Inc. (NYSE:STAY) has witnessed two different insiders pile up shares this week. Director Richard F. Wallman reported the acquisition of 40,000 shares on Monday at a weighted average price of $16.96, half of which are now indirectly held via his spouse’s Simplified Employee Pension Plan (SEP) and Individual Retirement Account (IRA). Following the transaction, the Director holds a direct ownership stake of 112,234 shares. Chief Marketing Officer Tom Seddon bought 18,900 shares at a weighted average cost of $16.84, enlarging his overall holdings to 264,455 shares.

Extended Stay America operates 682 hotel properties in the United States and Canada, but recently announced an agreement to sell a portfolio of 53 hotel properties for $285.0 million, with the transaction expected to close during the current quarter. Extended Stay America has seen its shares drop by 11% since the beginning of the year, mainly thanks to the disappointing third quarter earnings report that it released earlier this month. The company’s revenue increased by 6.5% year-over-year to $360.5 million, whereas its net income dropped by 3.3% to $58.2 million. The 13 hedge funds tracked by our team that were invested in the company at the end of the second quarter amassed 48.90% of its outstanding shares. Billionaire John Paulson of Paulson & Co. owns 47.66 million shares of Extended Stay America Inc. (NYSE:STAY) as of September 30.

Lastly, we will investigate the insider buying activity at the second-largest producer of natural gas and the 12^th-largest producer of oil and natural gas liquids in the United States, Chesapeake Energy Corporation (NYSE:CHK). Chief Executive Officer Robert D. Lawler acquired a 50,000-share block on Tuesday for $5.88 each, boosting his overall position to 701,400 shares. Just recently, Sterne Agee CRT downgraded shares of Chesapeake to ‘Neutral’ from ‘Buy’ and removed its price target of $13, citing liquidity concerns. The shares of Chesapeake are down by 69% this year, but some billionaire investors are still confident in the long-term performance of the company.

At the end of September, Chesapeake cut its workforce by roughly 15% so as to reduce costs and align its workforce with the current oil and natural gas commodity prices. The company anticipates that it will operate only 14 rigs at the beginning of 2016, compared to an average of 28 rigs in 2015 and 65 rigs in 2014. A total of 33 hedge funds tracked by Insider Monkey owned the stock at the end of the second quarter. Carl Icahn of Icahn Capital LP, who owns 73.05 million shares of Chesapeake Energy Corporation (NYSE:CHK) as of September 30, said at the DealBook conference that took place earlier this month that he continues to believe in the long-term performance of oil companies and doesn’t mind them going down in the short-term (read more details).

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