Carl Icahn Increases His Energy Bet; More Than Doubles Stake In Chesapeake Energy (CHK)

December 20, 2010 10:31 AM EST
Shares of Chesapeake Energy Corporation (NYSE: CHK) are higher today after activist investor Carl Icahn and hedge funds he controls disclosed late Friday that he raised his stake in the natural gas producer to 5.8 percent.

Carl Icahn now controls 38,629,417 shares, which is a substantial 230 percent jump from the 16,643,030 shares he held at the end of the third quarter.

The stake was disclosed in a 13D filing, which has set the rumor mill ablaze. A 13D filing is a form designated for an potential activist investment above 5%.

Icahn has an aggregate purchase price for the shares of approximately $945.9 million. This suggest an average purchase price of approximately $24.49 per share, which is just slightly below the current market price of $24.60. Margin was used to acquire the shares.

In a pretty standard disclosure, Icahn noted that the shares were acquired because they are viewed as undervalued. Icahn also stated the he, or his representatives, has had or intends to seek conversations with the company's management to discuses ways to maximization shareholder value.

Icahn and his fund made a number of a stock purchase in early December in the $22-$23 range, which boosted his stake above 5% and triggered the SEC filing.

Last week, Icahn made news after his Icahn Enterprises holding company announced an agreement to acquire Dynegy (NYSE: DYN) for $5.50 per share, which was above the $5 per share offer from private equity firm. Blackstone.

Shares of Chesapeake Energy are up 5.4 percent to $24.57 in early action Monday.

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