This is a really disturbing story of executive greed and corporate malfeasance. Just a couple of years ago Aubrey McCLendon levered up his personal stock holdings in his company and got crushed by margin calls when the stock dropped precipitously in the bear market. Then the board of directors authorized an egregious pay package which basically replenished McClendon’s lost stake. Now to see these backroom loans and excessive leverage once again rivals anything I’ve seen from the financial sector as far as corporate greed goes. There is value in Chesapeake’s (CHK) shares but the biggest thing holding the stock back is management, which are also the same people that helped the company develop such a great collection of assets. The reality is that McClendon is using shareholders money to leverage his funds once more in an irresponsible fashion, and as a Chesapeake shareholder I think it might be time for him to step down. It’s sad because he is a tremendously talented individual but at some point the founder needs to step away, and I think McClendon would rather be a part of a smaller wildcat outfit anyways based on his activities.
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.