CHESAPEAKE ENERGY $16.02 - New York symbol CHK

CHESAPEAKE ENERGY $16.02 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chk.com; Shares outstanding: 665.0 million; Market cap: $10.1 billion; Dividend yield: 2.2%) has filed regulatory reports showing that its chairman, Archie W. Dunham, recently purchased one million of the company’s shares at prices ranging from $13.92 to $14.05, for a total of $14 million. Dunham now holds 2.6 million shares.

As well, activist investor Carl Icahn recently increased his stake in the company to 10.98% from 9.98%. He bought his shares for $14.15 each and now holds 73 million shares, up from 66 million. Icahn has a long history of pushing companies to make changes that increase shareholder value.

Investors can put too much weight on insider trading, since insiders can delude themselves about their employer just as easily as outsiders—and it pays to remember that insiders may sell for a variety of personal reasons that have nothing to do with the company. On the other hand, insiders only make substantial buys for one reason—they think the company has investment appeal.

Chesapeake is still a buy.

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