Chesapeake’s Biggest Investor Grows More Bullish on Stock

Southeastern Asset Management Inc., the owner of one of every 10 shares in Chesapeake Energy Corp. (CHK), is more bullish on the natural gas producer as Chief Executive Officer Doug Lawler trims costs.

The outlook for Oklahoma City-based Chesapeake has improved because Lawler “has made substantial progress since taking the helm” in June, Southeastern said in a letter to its shareholders today. Chesapeake jumped 2.5 percent to $28.17 at the close in New York, the biggest gain since Nov. 4.

Lawler’s “capital discipline and operational effectiveness will reward shareholders,” the Memphis-based asset management firm led by O. Mason Hawkins said in the letter. Southeastern is the largest Chesapeake holder, with more than 68 million shares as of the end of last year, according to data compiled by Bloomberg.

Hawkins teamed last year with the company’s second-largest shareholder, billionaire activist investor Carl Icahn, to remove Chesapeake co-founder and shale-gas pioneer Aubrey McClendon from the CEO position. Lawler, a former Anadarko Petroleum Corp. (APC) executive, plans to cut spending another 20 percent this year, bringing it down to less than half of 2012 levels as the company sells assets and spins off its oilfield-services division.

From the time the 47-year-old Lawler’s appointment was announced, the stock has advanced 36 percent, outperforming the 12 percent rise in the Standard & Poor’s 500 Index and the 8.9 percent increase for Exxon Mobil Corp., the only company that produces more gas in the U.S. than Chesapeake.

Baker Hughes Inc. (BHI) was the best-performing energy stock in the S&P 500 today. The Houston-based driller rose as much as 5.3 percent after reporting stronger-than-expected quarterly profit.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Tina Davis, Carlos Caminada

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