Hedge funds sell Chesapeake stakes

A number of large hedge funds and other institutional investors sold their holdings in Chesapeake Energy Corp. in the first quarter, the Wall Street Journal reports.

 The newspaper says “the sales by some of the largest movers and shakers on Wall Street is a sign that the company was losing some of its luster with key investors even before it was rocked by a governance scandal in April.”

Oppenheimer energy analyst Fadel Gheit said Chesapeake took the “brunt of investor anger” when natural gas prices reached a 10-year low due to a mild winter.

Selling Chesapeake stock in the first quarter spared investors from losses over the past month, as the company’s share price has dropped nearly 30 percent after Reuters reported about up to $1.1 billion in personal loans secured by CEO Aubrey McClendon using his stake in the company’s wells. Questions about the company’s finances have contributed to the stock’s decline as well.

The Wall Street Journal report indicates seven institutional investors sold off at least 57 percent of their Chesapeake holdings, led by Two Sigma Investments LLC at 98 percent.

S.A.C. Capital Advisors LP divested itself of 91 percent of its Chesapeake stock in the first quarter, but the hedge fund still had stock worth more than $500,000 as of March 31.

Chesapeake’s stock closed March 30 at $23.17 a share. It was trading at almost $10 a share less on Thursday.

The Journal report noted one investor boosted its stake in Chesapeake during the quarter. Citadel Advisors LLC increased its holdings in the company six-fold to more than 2.9 million shares.

None of the invest0rs commented for Wall Street Journal report.

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