Thursday, June 21, 2012

New Board at Chesapeake ($CHK) Announced Today

Unusually for a Chris Helman Forbes article, this is a pretty good summary of the new Chesapeake board and the implications of the choices.

"[New director] Frederic Poses is the former CEO of American Standard, later renamed Trane. Poses swept into American Standard in 2000, cut deadwood, closed a plant, paid down debt, instituted Six Sigma and sold the company to Ingersoll-Rand in 2007 for $10 billion.
[...]
If you’re paying attention to these bios, you’ll notice that Dunham, Alexander, Martin and Poses all have experience in buying and selling large corporations. Could that be a sign of things to come at Chesapeake?"
Also worth reading is the company press release on the new directors. I think everyone should be pretty satisfied by this. Does anyone think that the former Chairman of ConocoPhillips and former Chief Executive Officer of Conoco has agreed to become the chairman of a "fraud"?

Natural gas for September 2012 is back to where it was in mid-March, when CHK was at $25. The panicky "natural gas is going to $0", "CHK is bankrupt", and "CHK is a fraud" ideas seem to be off the table. When my phone rings, I keep thinking it's the LBO announcement.

5 comments:

portland_allan said...

"Natural gas for September 2012 is back to where it was in mid-March, when CHK was at $25."

I'm reminded of this post you made last year:
Natural gas for September 2012 is back to where it was in mid-March, when CHK was at $25.

The sky-is-falling news articles were necessary for Icahn to get in on the cheap, and I suspect Southeastern increased their stake as well, or at least used it as an excuse to get a few board positions. Now that they're in we won't be getting the bad press (in both senses) anymore, but it still takes a while for people to get over their recency bias.

portland_allan said...

Apologies for fubbing the text on the hyperlink. The link is good, only the title is messed up.

CP said...

Ah, good memory!

How Well Do Financial Markets Separate News from Noise? Evidence from an Internet Blooper

http://libertystreeteconomics.newyorkfed.org/2011/10/how-well-do-financial-markets-separate-news-from-noise-evidence-from-an-internet-blooper.html

CP said...

"On September 8, 2008, a six-year-old article about the 2002 bankruptcy of United Airlines’ parent company resurfaced on the Internet and was mistakenly believed to be reporting a new bankruptcy filing by the company. This episode caused the company’s stock price to drop by as much as 76 percent in just a few minutes, before NASDAQ halted trading. After the “news” had been identified as false, the stock price rebounded, but still ended the day 11.2 percent below the previous close. Trading volumes skyrocketed during these extreme price movements. In subsequent days, the stock traded as much as 17 percent below its September 8 closing price, and on September 15 it finally traded above the price level seen just before the false news impacted the market."

CP said...

What's the difference between an old article and a new article about old news (the FWPP)?