Topic: Growth Stocks

Stock Pickers Digest Hotline – Friday, May 4, 2012

Article Excerpt

CHESAPEAKE ENERGY CORP., $17.39, symbol CHK on New York, is down about 50% from its high of $35.75 last August. That’s largely because natural gas prices have fallen to near 10-year lows. However, the drop has accelerated lately, partly on news that the company’s co-founder, CEO and chairman, Aubrey K. McClendon, took out loans that could put him in a conflict of interest. The U.S. Securities and Exchange Commission (SEC) is now investigating. For the past 19 years, McClendon received a perk that granted him the right to purchase a 2.5% stake in every new well that Chesapeake drills. He has now borrowed as much as $1.1 billion from lenders that include EIG Global Energy Partners. He apparently used these funds to pay for some of his interests in the wells, using his existing well interests as collateral. However, EIG is a big lender to Chesapeake, and that’s where the potential conflict arises. EIG may also be planning to buy some assets from Chesapeake. The company…