Loeb's Third Point fund moves into Chesapeake

Tue Jul 3, 2012 3:48pm EDT
 
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By Sam Forgione and Svea Herbst-Bayliss

NEW YORK/BOSTON (Reuters) - Activist investor Daniel Loeb may be gearing up for another boardroom battle after having amassed a big position in embattled natural gas producer Chesapeake Energy Corp (CHK.N: Quote),

Loeb's $8.7 billion hedge fund Third Point listed the embattled natural gas producer as its fourth largest position, according to emails the New York-based firm sent to several investors. Reuters reviewed a copy of the email.

The fund did not explicitly say whether Loeb has a net long position or a short position on Chesapeake. If an investor is long, he expects the share price to rise; a short position indicates he expects the stock will decline in price.

A person familiar with Third Point, who did not want to identified, said the hedge fund could have acquired its position through a combination of buying shares, debt and derivatives.

Third Point's big move into Chesapeake was disclosed only hours before U.S. financial markets were ready to close for the July 4 holiday but still managed to generate waves.

Chesapeake has been making headlines itself in the recent months as Aubrey McClendon, its chief executive officer, has come under fire for taking out more than $1.3 billion in personal loans from a firm that also does business with Chesapeake. The loans were first disclosed by Reuters.

Chesapeake's share price has tumbled 37.77 percent in the last 52 weeks to trade at $19.36, far below the $50 per share that several shareholders see it trading at in the future.

The company's relatively cheap share price plus the recent restructuring of the board might make for exactly the kind of conditions that activist investors like Loeb seek out.   Continued...

 
Daniel S. Loeb, founder of Third Point LLC, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May 9, 2012. REUTERS/Steve Marcus