Chesapeake up against low-key activist Mason Hawkins

Fri May 11, 2012 4:10pm EDT
 
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By Sam Forgione

NEW YORK (Reuters) - O. Mason Hawkins, whose $34 billion mutual fund firm is Chesapeake Energy Corp's largest shareholder, is best known as a Warren Buffett-style value investor who takes big stakes in companies and holds them, often for years.

But occasionally Hawkins turns activist and agitates for corporate change. His firm, Southeastern Asset Management, owns 13.6 percent of the embattled natural gas company, whose shares are down 41 percent since Southeastern began building its stake six years ago.

Chesapeake's board has come under fire after Reuters publicized that the company's co-founder and Chief Executive Officer Aubrey McClendon had borrowed $1.5 billion against stakes he received in wells drills by Chesapeake.

Hawkins, chairman and chief executive officer of Southeastern, sent a letter to Chesapeake's board on May 7 urging them to be open to an approach by a potential acquirer. A few days earlier, Hawkins applauded the board's decision to strip McClendon of his title as chairman.

Just a few months ago, Hawkins was praising McClendon for his ability to monetize the company's oil, gas and land assets.

Yet with shares of Chesapeake plunging about 10 percent since the initial Reuters story on April 18 about McClendon's loans, Hawkins is emerging as the voice of the Oklahoma-based company's beleaguered stockholders.

He took a similar activist strategy with Olympus, the Japan-based optics manufacturer, after it got embroiled in an accounting fraud scandal last October.

But even before the disclosure about the loans to McClendon, shares of Chesapeake had fallen 54 percent since September 2008 as a result of a collapse in natural gas prices.   Continued...

 
Chesapeake Energy Corporation's 50 acre campus is seen in Oklahoma City, Oklahoma, in this April 17, 2012 file photo. REUTERS/Steve Sisney/Files