After the close, Carl Icahn disclosed the disposition of a large stake in Chesapeake Energy (NYSE:CHK). The activist investor has long invested in a turnaround in the natural gas producer that hasn't ever materialized.
The 13D filing suggests Icahn sold for tax purposes, but one has to question if the move wasn't related to recent surge in the stock price. Trading at $8 recently, Chesapeake hadn't traded that high in nearly a year.
The question is whether one wants to hold the stock or follow the Underperform rating from FBR with a price target of $5. Ironically, Icahn sold after this downgrade at apparently every price he could obtain above $7.
Source: 13D Filing
Though Icahn still holds 35.3 million shares for a 4.55% position after dumping somewhere around 38 million shares, Icahn clearly wouldn't sell that many shares of a stock that he thought was headed higher. Icahn made the move due to the recent large gains in Chesapeake Energy.
Natural gas has rallied off the lows, but the inventory storage levels reported by the EIA aren't supportive of any major rally from here.
The key investor takeaway is that Icahn has plenty of other stocks to dump for tax planning. As well, if the thought process existed that Chesapeake was poised for a rally to $10 or above, do you really think the option was to dump the stock?
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