Chesapeake (CHK) Energy

Consider this not a suggestion or a warning, but rather an illuminating. Remember a couple weeks ago when Chesapeake Energy (CHK) did a reverse stock split (your 200 shares were converted to 1 share at 200x the current price)? Every informed investment publication warned that this was a move done from weakness, not strength.

We agreed. So did Susie B. A last gasp of sorts as a company was attempting to take its outstanding shares available level down 1/200th, creating an artificial scarcity. STAY AWAY! Right?

Well, as of earlier this morning shares of CHK are up approximately 150% in the past seven days. That’s insane. Does it make any sense? Not to our eyes. But once again, who cares? People confuse be analytically correct in stock market and making money in the market as if they should always be confluent. They needn’t be. All that really matters is the latter. If you chose to be contrarian on CHK after the reverse split and cashed in, good for you. How or why you did it doesn’t matter. 150% in one week’s time is incredible. That’s all that matters.

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