From September 2002 thorough April 2008, Aubrey K. McClendon, the billionaire chief executive of Chesapeake Energy Corp (CHK-$16.52) purchased more than 11 million shares of his company’s common stock at a total cost of approximately $319 million. Tragically, however, failing to remember that like all commodities — the price of natural gas is cyclical — McClendon recently went on a stock buying binge from April - June, purchasing an additional 2.45 million shares at an approximate cost of $108.4 million in open market transactions. Now comes word that McClendon has sold “substantially all” of his stock over the past three days in order to meet margin loan calls in the natural gas company he co-founded, the Company said late Friday.
Losing the Sand’s recommendation compounds an already bleak outlook at Circuit City (CC-$0.37). In the August-quarter of fiscal 2009, comparable store sales decreased 14.4 percent, driven by a double-digit decline in traffic as compared to last year. Specifically, strong sales growth in digital television converter boxes and video gaming products were not enough to offset tepid purchases of flat panel televisions and broad-based weakness in the sale of most other categories, including camcorders, projection and tube televisions, and personal computers. With $1.5 billion of inventory sitting on store shelves, markdowns could come quicker than the day after Christmas for gift seekers.
Ivanhoe Energy (IVAN-$1.14) announced Wednesday a definitive agreement with Ecuador state oil companies Petroecuador and Petroproduccion to explore and develop Ecuador’s Pungarayacu heavy-oil field, utilizing Ivanhoe’s HTL upgrading technology. Although Ivanhoe’s thermal cracking technology has the potential to substantially improve the economics and transportation of heavy oil, no commercial-scale HTL plant based on the proprietary technology has ever been constructed.
Long recognized as a well-run, innovative athletic footwear and apparel company, Nike (NKE-$54.54) has demonstrated its “swish” for making money in other investments, too.
Palm (PALM-$5.37) has bet heavily that new products and a new operating system platform can retake lost market share from Blackberry and iPhone. In the first quarter 2009, Palm paid $6.9 million, or 1.9% of sales, on its interest obligation. Looking ahead, the handset maker will be paying much more in borrowing costs.
Tighter credit and lower energy prices are forcing U.S natural gas drillers, such as Chesapeake Energy and Petrohawk Energy, to scale back capital expenditure budgets. Mark Smith, Chief Financial Officer of Ultra Petroleum (UPL-$38.00), told attendees at the 2008 Oil & Gas Investment Symposium in San Francisco, however, that Ultra’s liquidity continues to remain more than adequate to fund the 2008 capital budget of $945 million.
World Fuel Services (INT-$17.39) improved its liquidity profile by an additional $160 million after entering into a two year syndicated trade receivables purchase facility program with HSBC Bank. The monies will likely be used to purchase fuel products for re-sale to customers.
Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.
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