Speculating - Chesapeake Energy (CHK)

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Makaveli
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Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Tue Nov 12, 2019 9:28 am

To hold myself accountable -

I am normally robotic about investing and have never held an individual security. I gambled on Chesapeake Energy (CHK) due to a variety of factors, not to be disclosed.

First tranche cost basis came in at $2.7/share and then doubled down @ $2.02/share. Current price sits at $0.81/share after CHK posted a notice to the SEC that it may have trouble ahead.

Good news is that I followed all the rules, less than 5% of total portfolio. No re-dipping. I'm prepared for it to go to $0. There also appears to be complete fear for this stock (perhaps rightfully so).

Time will tell how this story plays out.
Last edited by Makaveli on Tue Nov 12, 2019 12:33 pm, edited 1 time in total.

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Re: First time Speculating - Chesapeake (CHK)

Post by Jack FFR1846 » Tue Nov 12, 2019 9:48 am

So you bought a stock that's heading into the toilet? Or did you short it?
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Re: First time Speculating - Chesapeake (CHK)

Post by Wiggums » Tue Nov 12, 2019 9:49 am

The CEO only purchased 125k so not much feedback there. Debt is the great equalizer for companies like this, and CHK has a lot of it. If oil and gas prices go up, they'll look like a bunch of heroes. If they go down, it'll be a bloodbath.

The company issued a “going concern” warning. A going concern is a business that has sufficient financial wherewithal and momentum to continue its normal operations into the future and would be able to absorb a bad turn of events without having to default on its liabilities.

Good luck to you...I hope conditions change to the positive. They had three negative quarters this year.
Last edited by Wiggums on Tue Nov 12, 2019 9:57 am, edited 2 times in total.

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Re: First time Speculating - Chesapeake (CHK)

Post by AZAttorney11 » Tue Nov 12, 2019 9:49 am

Why won't you disclose the rationale behind your speculation?

$.70 right now. You couldn't exchange a share of CHK for anything on a McDonald's Dollar Menu. CHK was trading at nearly $70 in July of 2008, for a total loss of 99% (the return would be higher if a shareholder received dividends in cash, when CHK used to pay such things, rather than reinvesting).

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Re: First time Speculating - Chesapeake (CHK)

Post by Makaveli » Tue Nov 12, 2019 12:35 pm

Jack FFR1846 wrote:
Tue Nov 12, 2019 9:48 am
So you bought a stock that's heading into the toilet? Or did you short it?
Purchased. This game would be much easier if someone had the foresight of an equity being a hero or a zero.

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Re: First time Speculating - Chesapeake (CHK)

Post by Makaveli » Tue Nov 12, 2019 12:37 pm

Wiggums wrote:
Tue Nov 12, 2019 9:49 am
The CEO only purchased 125k so not much feedback there. Debt is the great equalizer for companies like this, and CHK has a lot of it. If oil and gas prices go up, they'll look like a bunch of heroes. If they go down, it'll be a bloodbath.

The company issued a “going concern” warning. A going concern is a business that has sufficient financial wherewithal and momentum to continue its normal operations into the future and would be able to absorb a bad turn of events without having to default on its liabilities.

Good luck to you...I hope conditions change to the positive. They had three negative quarters this year.
Nice synopsis. I tend to be a contrarian. CHK is riddled with debt but the issue of the "going concern" has created an absolute melt down. They've had that debt for years, in plain sight, so what new information is there to cause 40%+ drop in one week?
Last edited by Makaveli on Tue Nov 12, 2019 12:43 pm, edited 1 time in total.

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Re: First time Speculating - Chesapeake (CHK)

Post by Makaveli » Tue Nov 12, 2019 12:39 pm

AZAttorney11 wrote:
Tue Nov 12, 2019 9:49 am
Why won't you disclose the rationale behind your speculation?

$.70 right now. You couldn't exchange a share of CHK for anything on a McDonald's Dollar Menu. CHK was trading at nearly $70 in July of 2008, for a total loss of 99% (the return would be higher if a shareholder received dividends in cash, when CHK used to pay such things, rather than reinvesting).
Not sure what this adds to the conversation but yes, $0.70 does not purchase a $1.00 item and they've had a tough go. Hence the use of the term "gamble".

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Re: First time Speculating - Chesapeake (CHK)

Post by AZAttorney11 » Tue Nov 12, 2019 12:42 pm

Makaveli wrote:
Tue Nov 12, 2019 12:37 pm
Wiggums wrote:
Tue Nov 12, 2019 9:49 am
The CEO only purchased 125k so not much feedback there. Debt is the great equalizer for companies like this, and CHK has a lot of it. If oil and gas prices go up, they'll look like a bunch of heroes. If they go down, it'll be a bloodbath.

The company issued a “going concern” warning. A going concern is a business that has sufficient financial wherewithal and momentum to continue its normal operations into the future and would be able to absorb a bad turn of events without having to default on its liabilities.

Good luck to you...I hope conditions change to the positive. They had three negative quarters this year.
Nice synopsis. I tend to be a contrarian. CHK is riddled with debt but the issue of the "going concern" has created an absolute melt down. They've had that debt for years, in plain sight, so what new information is there to cause 60-70% drop in one week?
How about the negative free cash flow, asset sales, cut in exploration, persistently low oil and gas prices compared to what CHK needs to be cash flow positive, etc.? That stuff may have been known "for years" but eventually worries about the future become worries about today. Their debt is astronomical and debt holders aren't your only concerns. Last I looked, CHK had maybe $1.5bn of preferred stock outstanding.

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Re: First time Speculating - Chesapeake (CHK)

Post by Makaveli » Tue Nov 12, 2019 12:48 pm

AZAttorney11 wrote:
Tue Nov 12, 2019 12:42 pm
Makaveli wrote:
Tue Nov 12, 2019 12:37 pm
Wiggums wrote:
Tue Nov 12, 2019 9:49 am
The CEO only purchased 125k so not much feedback there. Debt is the great equalizer for companies like this, and CHK has a lot of it. If oil and gas prices go up, they'll look like a bunch of heroes. If they go down, it'll be a bloodbath.

The company issued a “going concern” warning. A going concern is a business that has sufficient financial wherewithal and momentum to continue its normal operations into the future and would be able to absorb a bad turn of events without having to default on its liabilities.

Good luck to you...I hope conditions change to the positive. They had three negative quarters this year.
Nice synopsis. I tend to be a contrarian. CHK is riddled with debt but the issue of the "going concern" has created an absolute melt down. They've had that debt for years, in plain sight, so what new information is there to cause 60-70% drop in one week?
How about the negative free cash flow, asset sales, cut in exploration, persistently low oil and gas prices compared to what CHK needs to be cash flow positive, etc.? That stuff may have been known "for years" but eventually worries about the future become worries about today. Their debt is astronomical and debt holders aren't your only concerns. Last I looked, CHK had maybe $1.5bn of preferred stock outstanding.
That's right, debt and lack of cash flow are the real killers. They'll need commodity support and reduced CAPEX to survive the upcoming debt maturities.

It's all about survival and to buy time they're slashing G&A and corporate spending levels in 2020. I wouldn't mind seeing Lawler's $27MM total comp package reduced & purely tied to equity as well.

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Re: Speculating - Chesapeake Energy (CHK)

Post by veggivet » Tue Nov 12, 2019 12:58 pm

The only path I see for CHK is for oil prices to rise significantly, and soon. Barring that, bankruptcy is very likely within a few months...I'm glad this investment represented a very small slice of your overall portfolio.
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Re: Speculating - Chesapeake Energy (CHK)

Post by snackdog » Tue Nov 12, 2019 1:50 pm

If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.

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Re: Speculating - Chesapeake Energy (CHK)

Post by veggivet » Tue Nov 12, 2019 1:56 pm

Shorts are happy today; stock down around 15%.
If you watch your pennies, your dollars will take care of themselves.

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Re: Speculating - Chesapeake Energy (CHK)

Post by an_asker » Tue Nov 12, 2019 1:57 pm

Makaveli wrote:
Tue Nov 12, 2019 9:28 am
To hold myself accountable -

I am normally robotic about investing and have never held an individual security. I gambled on Chesapeake Energy (CHK) due to a variety of factors, not to be disclosed.

First tranche cost basis came in at $2.7/share and then doubled down @ $2.02/share. Current price sits at $0.81/share after CHK posted a notice to the SEC that it may have trouble ahead.

Good news is that I followed all the rules, less than 5% of total portfolio. No re-dipping. I'm prepared for it to go to $0. There also appears to be complete fear for this stock (perhaps rightfully so).

Time will tell how this story plays out.
Have you purchased some PG&E as well?

Full disclosure: I did. 25 shares. For $6.1 apiece. Got yelled at by DW when I told her (when it was at $8) that I'd done so. Next day, I got rid of the lot at $6.9 apiece (it had tanked). I will treat myself to a nice meal one of these days LOL!

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Tue Nov 12, 2019 1:58 pm

snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
New drills decline around 20% YoY but base production for most companies is declining single digit. If it's not, a more nimble shop will come slurp it up and drive efficiencies.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Random Poster » Tue Nov 12, 2019 2:01 pm

Makaveli wrote:
Tue Nov 12, 2019 1:58 pm
snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
New drills decline around 20% YoY but base production for most companies is declining single digit. If it's not, a more nimble shop will come slurp it up and drive efficiencies.
Isn't the base production that you reference in regards to vertical wells?

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Re: Speculating - Chesapeake Energy (CHK)

Post by AZAttorney11 » Tue Nov 12, 2019 2:03 pm

snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
I suppose that's possible, but the debt burden is massive for CHK. They've already embarked on asset sales and more will continue. I don't think their shrink to grow strategy is going to work (although, admittedly, I don't think anything else is going to work for CHK, so what's the harm in giving it a shot?). Too much debt, commodity prices are too low, etc.

I saw some of their debt at 55 cents on the dollar. That's the play I'd be making now. I don't think CHK has poor assets, but they certainly paid a lot for them and Aubrey LOVED leveraging and getting bigger at any cost. It's actually quite sad to see all of this taking place.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Grt2bOutdoors » Tue Nov 12, 2019 4:52 pm

AZAttorney11 wrote:
Tue Nov 12, 2019 2:03 pm
snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
I suppose that's possible, but the debt burden is massive for CHK. They've already embarked on asset sales and more will continue. I don't think their shrink to grow strategy is going to work (although, admittedly, I don't think anything else is going to work for CHK, so what's the harm in giving it a shot?). Too much debt, commodity prices are too low, etc.

I saw some of their debt at 55 cents on the dollar. That's the play I'd be making now. I don't think CHK has poor assets, but they certainly paid a lot for them and Aubrey LOVED leveraging and getting bigger at any cost. It's actually quite sad to see all of this taking place.
Not sure, but think they have complicated production sharing royalty agreements with third parties. IDK, I looked at their 10K a few years ago, said what a mess and thought this stock had no where to go but down for all of the reasons you listed and more.
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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Mon Nov 18, 2019 4:36 pm

Random Poster wrote:
Tue Nov 12, 2019 2:01 pm
Makaveli wrote:
Tue Nov 12, 2019 1:58 pm
snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
New drills decline around 20% YoY but base production for most companies is declining single digit. If it's not, a more nimble shop will come slurp it up and drive efficiencies.
Isn't the base production that you reference in regards to vertical wells?
Broadly speaking, base production includes everything that's online/flowing. So that would be both verticals and horizontals.

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Re: Speculating - Chesapeake Energy (CHK)

Post by snackdog » Mon Nov 18, 2019 4:43 pm

Makaveli wrote:
Tue Nov 12, 2019 1:58 pm
snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
New drills decline around 20% YoY but base production for most companies is declining single digit. If it's not, a more nimble shop will come slurp it up and drive efficiencies.
Chesapeake would be worth a fortune if their new wells only decined 20%. Wells decline 60-70% in their first couple years and then eventually flatten out around 20%/yr.

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Re: Speculating - Chesapeake Energy (CHK)

Post by rich126 » Mon Nov 18, 2019 4:50 pm

I have no issues with buying stocks, especially if you have a clue as to their earnings, business, etc. but doubling down when a questionable stock drops is one of the best ways to lose a lot of money. While not intuitive, it is usually better to buy stocks as they make new highs rather than when they keep going lower. or buy a quality stock when the market overall tanks but nothing about the company's future has changed.

My story on this didn't involve me but coworkers who were making a lot of money on CMGI (I suppose you could call it an incubator/financier of Internet companies back in the 1990s). I think a sports stadium may have even had their name on it. Anyhow every time it drop a bit, they would buy more. And then 2000/2001 came and as it dropped they bought more and more. Despite some huge gains, I think they ended up losing everything.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Tue Nov 19, 2019 8:21 am

snackdog wrote:
Mon Nov 18, 2019 4:43 pm
Makaveli wrote:
Tue Nov 12, 2019 1:58 pm
snackdog wrote:
Tue Nov 12, 2019 1:50 pm
If they no longer have the cash to drill (due to debt service obligations), their production will decline and their revenue/earnings/cash flow along with it. Shale and tight decline around 20% per year without drilling. A downward spiral to bankruptcy.

As someone said, you are essentially betting on a commodity price rise (or a takeover from a buyer who can't wait until bankruptcy). You could be right, but most signals are pointing to continued oversupply and weakening prices.
New drills decline around 20% YoY but base production for most companies is declining single digit. If it's not, a more nimble shop will come slurp it up and drive efficiencies.
Chesapeake would be worth a fortune if their new wells only decined 20%. Wells decline 60-70% in their first couple years and then eventually flatten out around 20%/yr.
Fair, it's exponential at first yet not sure what basin/reservoir you're thinking flattens @ 20%/year. If you know a few, please share cause they'd go on my hot list of operators/positions to acquire & streamline.

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Re: Speculating - Chesapeake Energy (CHK)

Post by snackdog » Tue Nov 19, 2019 8:43 am

Concho is forecast to have about a 40% decline...

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Wed Dec 18, 2019 10:57 pm

Officially harvested today @ $0.87. Re invested into total US and International. North of 20k loss. Serves me right after attempting to speculate. Hopefully this serves as a thread for future speculators & the risk of individual securities.

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Re: Speculating - Chesapeake Energy (CHK)

Post by HomerJ » Wed Dec 18, 2019 11:26 pm

Thank you for posting this.

The only stories I hear from my brother-in-law are about his winners. :)
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Re: Speculating - Chesapeake Energy (CHK)

Post by Cubicle » Thu Dec 19, 2019 1:27 am

Oddly co-incidental. Years ago I registered with Robinhood (the free stock trading program). I invested in Chesapeake energy on a "hot tip" from some bogus internet forum. Lost >95% of my initial $1,000 starting money. Lesson learned....
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Re: Speculating - Chesapeake Energy (CHK)

Post by BlueCable » Thu Dec 19, 2019 6:42 am

Makaveli wrote:
Wed Dec 18, 2019 10:57 pm
Officially harvested today @ $0.87. Re invested into total US and International. North of 20k loss. Serves me right after attempting to speculate. Hopefully this serves as a thread for future speculators & the risk of individual securities.
To rub it in: did you include the opportunity cost of the a Total Stock Market's 5-10% gain in your loss calculation?

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Re: Speculating - Chesapeake Energy (CHK)

Post by Strayshot » Thu Dec 19, 2019 8:38 am

It is all gambling. I’m on the other side of this trade, in at -60 cents a share and sitting at a 50% gain right now in about 3 weeks holding (at the current 90 cents a share price).

I would reiterate the important takeaway is to never speculate with money you can’t afford to lose and (per OP) keep the gambling to <5% of the portfolio.

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Re: Speculating - Chesapeake Energy (CHK)

Post by F150HD » Thu Dec 19, 2019 9:45 pm

BlueCable wrote:
Thu Dec 19, 2019 6:42 am
Makaveli wrote:
Wed Dec 18, 2019 10:57 pm
Officially harvested today @ $0.87. Re invested into total US and International. North of 20k loss. Serves me right after attempting to speculate. Hopefully this serves as a thread for future speculators & the risk of individual securities.
To rub it in: did you include the opportunity cost of the a Total Stock Market's 5-10% gain in your loss calculation?
:shock:
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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Thu Dec 19, 2019 9:46 pm

BlueCable wrote:
Thu Dec 19, 2019 6:42 am
Makaveli wrote:
Wed Dec 18, 2019 10:57 pm
Officially harvested today @ $0.87. Re invested into total US and International. North of 20k loss. Serves me right after attempting to speculate. Hopefully this serves as a thread for future speculators & the risk of individual securities.
To rub it in: did you include the opportunity cost of the a Total Stock Market's 5-10% gain in your loss calculation?
But it’s so much better to forget that step.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Thu Dec 19, 2019 9:47 pm

Strayshot wrote:
Thu Dec 19, 2019 8:38 am
It is all gambling. I’m on the other side of this trade, in at -60 cents a share and sitting at a 50% gain right now in about 3 weeks holding (at the current 90 cents a share price).

I would reiterate the important takeaway is to never speculate with money you can’t afford to lose and (per OP) keep the gambling to <5% of the portfolio.
You’re officially a better timer. My contrarian bet was too soon.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Strayshot » Tue Jun 09, 2020 10:19 am

So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......

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Re: Speculating - Chesapeake Energy (CHK)

Post by Valuethinker » Tue Jun 09, 2020 11:39 am

I read on Bloomberg that small investors are speculating in bankruptcy candidate stocks such as cruise liner stocks.

When your stock price is below USD, I believe you are at threat of delisting from NYSE? So a stock consolidation is surely coming.

I think this is all not going to end well. The very high volatility attracts the gambling instinct & the gambler. There are times when gains of 2x and 3x, on paper, appear in prospect. But the reality is these companies are nearly bankrupt, i.e. the assets of the company are worth less than the liabilities. Shareholders will be heavily diluted, if not wiped out.

I remember doing this with a brickmaker (warrants on the stock) in the early 1990s when the UK was in a building recession. Spoiler warning: I lost 90% of my money.

I also think too many people are sitting around at home with too much time on their hands, watching other people make too much money in the stock market. *That* reminds me of 1999-2000, and, again, it will not end well.

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Re: Speculating - Chesapeake Energy (CHK)

Post by 1789 » Tue Jun 09, 2020 6:02 pm

Valuethinker wrote:
Tue Jun 09, 2020 11:39 am
I read on Bloomberg that small investors are speculating in bankruptcy candidate stocks such as cruise liner stocks.

When your stock price is below USD, I believe you are at threat of delisting from NYSE? So a stock consolidation is surely coming.

I think this is all not going to end well. The very high volatility attracts the gambling instinct & the gambler. There are times when gains of 2x and 3x, on paper, appear in prospect. But the reality is these companies are nearly bankrupt, i.e. the assets of the company are worth less than the liabilities. Shareholders will be heavily diluted, if not wiped out.

I remember doing this with a brickmaker (warrants on the stock) in the early 1990s when the UK was in a building recession. Spoiler warning: I lost 90% of my money.

I also think too many people are sitting around at home with too much time on their hands, watching other people make too much money in the stock market. *That* reminds me of 1999-2000, and, again, it will not end well.
Interesting times. I have a close friend who made ~50% gains last week with BA/airlines.. It seems he put $1000 and sold when he has like $1500 on Friday. I told him why he is wasting his time and not focusing on saving rather than some random stock returns. (we have similar jobs working on same company so he earns similar to y salary) . But i agree people don’t want to hear about saving, they want to focus on returns and get rich quick scenarios.
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Re: Speculating - Chesapeake Energy (CHK)

Post by anon_investor » Tue Jun 09, 2020 6:13 pm

1789 wrote:
Tue Jun 09, 2020 6:02 pm
Valuethinker wrote:
Tue Jun 09, 2020 11:39 am
I read on Bloomberg that small investors are speculating in bankruptcy candidate stocks such as cruise liner stocks.

When your stock price is below USD, I believe you are at threat of delisting from NYSE? So a stock consolidation is surely coming.

I think this is all not going to end well. The very high volatility attracts the gambling instinct & the gambler. There are times when gains of 2x and 3x, on paper, appear in prospect. But the reality is these companies are nearly bankrupt, i.e. the assets of the company are worth less than the liabilities. Shareholders will be heavily diluted, if not wiped out.

I remember doing this with a brickmaker (warrants on the stock) in the early 1990s when the UK was in a building recession. Spoiler warning: I lost 90% of my money.

I also think too many people are sitting around at home with too much time on their hands, watching other people make too much money in the stock market. *That* reminds me of 1999-2000, and, again, it will not end well.
Interesting times. I have a close friend who made ~50% gains last week with BA/airlines.. It seems he put $1000 and sold when he has like $1500 on Friday. I told him why he is wasting his time and not focusing on saving rather than some random stock returns. (we have similar jobs working on same company so he earns similar to y salary) . But i agree people don’t want to hear about saving, they want to focus on returns and get rich quick scenarios.
Sounds like the opposite of my coworker who last year lost a bundle on BA thinking the dip after the 2nd 737 Max crash was a buying opportunity. He was lucky to sell before COVID19...

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Re: Speculating - Chesapeake Energy (CHK)

Post by BW1985 » Tue Jun 09, 2020 7:50 pm

1789 wrote:
Tue Jun 09, 2020 6:02 pm
Valuethinker wrote:
Tue Jun 09, 2020 11:39 am
I read on Bloomberg that small investors are speculating in bankruptcy candidate stocks such as cruise liner stocks.

When your stock price is below USD, I believe you are at threat of delisting from NYSE? So a stock consolidation is surely coming.

I think this is all not going to end well. The very high volatility attracts the gambling instinct & the gambler. There are times when gains of 2x and 3x, on paper, appear in prospect. But the reality is these companies are nearly bankrupt, i.e. the assets of the company are worth less than the liabilities. Shareholders will be heavily diluted, if not wiped out.

I remember doing this with a brickmaker (warrants on the stock) in the early 1990s when the UK was in a building recession. Spoiler warning: I lost 90% of my money.

I also think too many people are sitting around at home with too much time on their hands, watching other people make too much money in the stock market. *That* reminds me of 1999-2000, and, again, it will not end well.
Interesting times. I have a close friend who made ~50% gains last week with BA/airlines.. It seems he put $1000 and sold when he has like $1500 on Friday. I told him why he is wasting his time and not focusing on saving rather than some random stock returns. (we have similar jobs working on same company so he earns similar to y salary) . But i agree people don’t want to hear about saving, they want to focus on returns and get rich quick scenarios.
It's always somewhat of a let down when I hear of people making "huge gains!" and then I find out the investment was $1000 up to $1500. I mean good for them, but it's a different risk level buying 1k than 100k.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Tue Jun 09, 2020 10:11 pm

Strayshot wrote:
Tue Jun 09, 2020 10:19 am
So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......
The future holds a restructuring where EQ goes to 0. Unfortunately not many retail investors know that they’re behind the bond holders.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Strayshot » Wed Jun 10, 2020 5:05 pm

Makaveli wrote:
Tue Jun 09, 2020 10:11 pm
Strayshot wrote:
Tue Jun 09, 2020 10:19 am
So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......
The future holds a restructuring where EQ goes to 0. Unfortunately not many retail investors know that they’re behind the bond holders.
Agreed, I was out yesterday and booked about a 60% loss, so put my name down next to yours in the list of gamblers who lost (and similar $$$ too, misery loves company!) I actually closed out all of my taxable positions in oil and gas (including Chevron and Exxon) yesterday and today. My crystal ball says that what is coming from CHK will reverberate through the industry.

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Re: Speculating - Chesapeake Energy (CHK)

Post by sd323232 » Wed Jun 10, 2020 5:12 pm

Makaveli wrote:
Tue Nov 12, 2019 9:28 am
To hold myself accountable -

I am normally robotic about investing and have never held an individual security. I gambled on Chesapeake Energy (CHK) due to a variety of factors, not to be disclosed.

First tranche cost basis came in at $2.7/share and then doubled down @ $2.02/share. Current price sits at $0.81/share after CHK posted a notice to the SEC that it may have trouble ahead.

Good news is that I followed all the rules, less than 5% of total portfolio. No re-dipping. I'm prepared for it to go to $0. There also appears to be complete fear for this stock (perhaps rightfully so).

Time will tell how this story plays out.
i remember alot of people bought it after 2014 December oil crash, for the dividend, thinking it will recover by 2020 and pay good dividend on top. Lock at the chart from 2014 to now. LOL

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Re: Speculating - Chesapeake Energy (CHK)

Post by bigred77 » Wed Jun 10, 2020 5:27 pm

Since misery loves company I will add my name to the list of gamblers burned by CHK.

I traded CHK off and on over the past 2 years, it was always hugely volatile. Was probably up close to 7k. Then in Q1 2020 I lost all my gains and eventually exited with a 20k loss shortly after the reverse split occurred. I thought they’d eventually get bought up by either a major or private group who would reset their debt/equity structure. Shows what I know.

At least this was in a taxable account. Hopefully I’ve relearned this lesson again.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Thu Jun 11, 2020 7:11 pm

Strayshot wrote:
Wed Jun 10, 2020 5:05 pm
Makaveli wrote:
Tue Jun 09, 2020 10:11 pm
Strayshot wrote:
Tue Jun 09, 2020 10:19 am
So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......
The future holds a restructuring where EQ goes to 0. Unfortunately not many retail investors know that they’re behind the bond holders.
Agreed, I was out yesterday and booked about a 60% loss, so put my name down next to yours in the list of gamblers who lost (and similar $$$ too, misery loves company!) I actually closed out all of my taxable positions in oil and gas (including Chevron and Exxon) yesterday and today. My crystal ball says that what is coming from CHK will reverberate through the industry.
Coming from someone who's intimately embedded in this sector, it's a tough road ahead. Fast forward 5 years and it'll be a distribution model that sheds 8-10% dividends. Consistently.

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Thu Jun 11, 2020 7:14 pm

bigred77 wrote:
Wed Jun 10, 2020 5:27 pm
Since misery loves company I will add my name to the list of gamblers burned by CHK.

I traded CHK off and on over the past 2 years, it was always hugely volatile. Was probably up close to 7k. Then in Q1 2020 I lost all my gains and eventually exited with a 20k loss shortly after the reverse split occurred. I thought they’d eventually get bought up by either a major or private group who would reset their debt/equity structure. Shows what I know.

At least this was in a taxable account. Hopefully I’ve relearned this lesson again.
No major or PE could, despite being highly interested in their ETX Haynesville and Appalachia Marcellus assets. They are world class. Unfortunately, those darlings could never see the light of day because that black cloud of debt was front and center.

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Re: Speculating - Chesapeake Energy (CHK)

Post by abuss368 » Thu Jun 11, 2020 7:20 pm

I gave up years ago speculating our money with individual stocks. I actually don’t even want to be bothered at this point.

Remember when you are buying and thinking it is the next best thing there is someone else (a Gordon Gekko) on the other side of that trade.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Speculating - Chesapeake Energy (CHK)

Post by Strayshot » Fri Jun 12, 2020 7:37 am

Makaveli wrote:
Thu Jun 11, 2020 7:11 pm
Strayshot wrote:
Wed Jun 10, 2020 5:05 pm
Makaveli wrote:
Tue Jun 09, 2020 10:11 pm
Strayshot wrote:
Tue Jun 09, 2020 10:19 am
So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......
The future holds a restructuring where EQ goes to 0. Unfortunately not many retail investors know that they’re behind the bond holders.
Agreed, I was out yesterday and booked about a 60% loss, so put my name down next to yours in the list of gamblers who lost (and similar $$$ too, misery loves company!) I actually closed out all of my taxable positions in oil and gas (including Chevron and Exxon) yesterday and today. My crystal ball says that what is coming from CHK will reverberate through the industry.
Coming from someone who's intimately embedded in this sector, it's a tough road ahead. Fast forward 5 years and it'll be a distribution model that sheds 8-10% dividends. Consistently.
I actually had CVX and XOM intended for the dividend payout as buy and hold, not planning a gamble on those, but unloaded because of the coming petroleum-pocalypse. Maybe I will re-acquire those positions in a year or two, who knows.

Watching the bloodbath yesterday I feel like a market timing genius, avoided another 8-9% loss. Better to be lucky than good :oops:

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Re: Speculating - Chesapeake Energy (CHK)

Post by Makaveli » Fri Jun 12, 2020 8:51 am

Strayshot wrote:
Fri Jun 12, 2020 7:37 am
Makaveli wrote:
Thu Jun 11, 2020 7:11 pm
Strayshot wrote:
Wed Jun 10, 2020 5:05 pm
Makaveli wrote:
Tue Jun 09, 2020 10:11 pm
Strayshot wrote:
Tue Jun 09, 2020 10:19 am
So given the nearly tripling of CHK yesterday (which still put me down like 25% from my gamble in this thread before the 200:1 reverse split) CHK is now halted on news of potential bankruptcy. For posterity, just figured I would update. We will see what the Future holds......
The future holds a restructuring where EQ goes to 0. Unfortunately not many retail investors know that they’re behind the bond holders.
Agreed, I was out yesterday and booked about a 60% loss, so put my name down next to yours in the list of gamblers who lost (and similar $$$ too, misery loves company!) I actually closed out all of my taxable positions in oil and gas (including Chevron and Exxon) yesterday and today. My crystal ball says that what is coming from CHK will reverberate through the industry.
Coming from someone who's intimately embedded in this sector, it's a tough road ahead. Fast forward 5 years and it'll be a distribution model that sheds 8-10% dividends. Consistently.
I actually had CVX and XOM intended for the dividend payout as buy and hold, not planning a gamble on those, but unloaded because of the coming petroleum-pocalypse. Maybe I will re-acquire those positions in a year or two, who knows.

Watching the bloodbath yesterday I feel like a market timing genius, avoided another 8-9% loss. Better to be lucky than good :oops:
Well to be fair, I bought $6k of Oxy in my rIRA this year for it's tax free 9% div yield and guess where it currently sits..

Surprise alert, one whopping penny.

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Re: Speculating - Chesapeake Energy (CHK)

Post by annu » Fri Jun 12, 2020 5:26 pm

I really think, robinhood has enabled many folks to pursue almost wallstreetbets kinds of strategies, and with stimulus checks+low margin loans, and being locked down in homes things like hertz are fine example of things to come

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Re: Speculating - Chesapeake Energy (CHK)

Post by abuss368 » Fri Jun 12, 2020 5:29 pm

I recall reading about this company every day in The Wall Street Journal when it hit the fan.
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Re: Speculating - Chesapeake Energy (CHK)

Post by 02nz » Wed Jun 17, 2020 12:17 pm

Looks like a bankruptcy filing will come soon, meaning shareholders are likely to be wiped out (well, most of them are already pretty much wiped out, but soon the stock will likely become worthless).

https://uk.reuters.com/article/chesapea ... KL1N2DT03L

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Re: Speculating - Chesapeake Energy (CHK)

Post by petulant » Wed Jun 17, 2020 12:33 pm

Makaveli wrote:
Thu Jun 11, 2020 7:14 pm
bigred77 wrote:
Wed Jun 10, 2020 5:27 pm
Since misery loves company I will add my name to the list of gamblers burned by CHK.

I traded CHK off and on over the past 2 years, it was always hugely volatile. Was probably up close to 7k. Then in Q1 2020 I lost all my gains and eventually exited with a 20k loss shortly after the reverse split occurred. I thought they’d eventually get bought up by either a major or private group who would reset their debt/equity structure. Shows what I know.

At least this was in a taxable account. Hopefully I’ve relearned this lesson again.
No major or PE could, despite being highly interested in their ETX Haynesville and Appalachia Marcellus assets. They are world class. Unfortunately, those darlings could never see the light of day because that black cloud of debt was front and center.
Correct. I considered a speculative investment around six months ago. During due diligence I determined CHK was already insolvent and the bottom bondholders were likely not going to be paid off. Nobody will buy out equity for any premium if they have to absorb at least $2-3 billion in unsupported debt.

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Re: Speculating - Chesapeake Energy (CHK)

Post by 02nz » Wed Jun 17, 2020 12:37 pm

bigred77 wrote:
Wed Jun 10, 2020 5:27 pm
Since misery loves company I will add my name to the list of gamblers burned by CHK.

I traded CHK off and on over the past 2 years, it was always hugely volatile. Was probably up close to 7k. Then in Q1 2020 I lost all my gains and eventually exited with a 20k loss shortly after the reverse split occurred. I thought they’d eventually get bought up by either a major or private group who would reset their debt/equity structure. Shows what I know.

At least this was in a taxable account. Hopefully I’ve relearned this lesson again.
I know someone who lost 7 figures on this stock :oops: :oops: :oops: (and who really couldn't afford that kind of loss). Consider yours a relatively inexpensive lesson.

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Re: Speculating - Chesapeake Energy (CHK)

Post by 7eight9 » Sun Jun 28, 2020 7:02 pm

Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection
HOUSTON — Chesapeake Energy, a pioneer in extracting natural gas from shale rock across the country, filed for bankruptcy protection on Sunday, unable to overcome a mountain of debt that became unsustainable after a decade of stubbornly low gas prices.
https://www.nytimes.com/2020/06/28/busi ... e=Homepage
I guess it all could be much worse. | They could be warming up my hearse.

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