Chesapeake Energy and Carlyle Group Might Face Losses


May. 21 2020, Updated 12:49 p.m. ET

So far in 2020, Chesapeake Energy (NYSE:CHK) has declined 92%. The COVID-19 outbreak hit oil demand and dragged the energy sector down. The SPDR S&P Oil & Gas Exploration & Production ETF (OTCMKTS:XOP) has fallen 34.5% this year.

The Vanguard Group, the largest institutional holder of Chesapeake Energy, bought just 52,308 stocks in the first quarter of 2020. In the same quarter, BlackRock sold around 320,000 Chesapeake Energy stocks. BlackRock was the largest seller among the top ten institutional holders. The mammoth fall in the company’s stock prices might be lucrative for investors. However, the company is on the verge of filing for bankruptcy.

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Top sellers

In the first quarter of 2020, Carlyle Group exited most of its stake in Chesapeake Energy. The hedge fund sold around 864,000 Chesapeake Energy stocks. Notably, Carlyle Group was the largest institutional seller. In the fourth quarter of 2019, Chesapeake Energy accounted for 9.78% of Carlyle Group’s total portfolio of publicly traded securities.

The figure has fallen to 1.3% in the last quarter. The hedge fund accumulated the stock in the first quarter of 2019. Between the first quarter of 2019 and the first quarter of 2020, the stock prices declined 94.4%. Carlyle Group might have made a huge loss in its investment. Centennial Resource Development (NASDAQ:CDEV), an upstream oil and gas stock, was one of Carlyle Group’s other largest sells in the last quarter.

Franklin Resources and Capital Research Global Investors were the second and third-largest institutional sellers of Chesapeake Energy stock. 

Chesapeake Energy’s outlook

On May 11, the company reported its results for the first quarter of 2020. The company reported a net loss of $57.42 per share. Analysts’ mean estimate suggested a loss of $16 per share. After the earnings result, Chesapeake Energy’s stock prices declined by 12.2%.

However, with the rise in oil prices, the company’s stock prices could gain more. Natural gas prices usually rise during the summer season, which could help the stock recover. For positive earnings, WTI should be more than $50 per barrel. On Wednesday, WTI crude oil active futures closed at $33.49 per barrel.


On Wednesday, Chesapeake Energy’s stock prices closed 20.3% and 45.9% below their 20 and 50-day moving averages, respectively. Also, the stock prices were 78.8% and 90.9% below their 100 and 200-day moving averages. Technically, the levels indicate a strong weakness in the stock prices.

The 20-day moving average at $17.8 is an important resistance zone for Chesapeake Energy’s stock prices. If oil prices surge due to increased demand amid the Memorial Day holiday, the company might test the 20-day moving average next week.


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