Don't Like Your Share Price? Go Sue Someone
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The most effective parasites don’t actually kill their hosts they simply drain enough resources required for their survival. Should the host meet an untimely demise, the parasite would also perish. Some of them get it, some don’t. Leeches are pretty good at consuming only what they need, ultimately detaching themselves, then enjoy one of those long Sunday afternoon naps, massaging their swollen bellies as they dream of the next gourmet meal.
I received my notice to purchasers of Chesapeake Energy Corp. (NYSE: CHK), last week, and I actually thought about it for a brief second or two. Maybe three seconds, since I took a picture of it and jokingly tweeted about it. There were a couple of rather interesting sentences in one paragraph of the notice that struck my deep brown eyes:
“Not until April 18, 2012, were these previously undisclosed details made public by investigative reports published by Reuters and The Wall Street Journal. Chesapeake shares plummeted $1.06 (from $19.12 per share), a 5.5% decline representing over $500 million in market value losses.”
The next sentence in the paragraph contains a misspelling, so the only action I am taking in this matter is to submit my resume for a legal editor position with this fine firm.
“Plummeted”? “5.5%”? Chesapeake CEO Aubrey McClendon’s actions notwithstanding, I scoured through the immense stack of holdings in one of my portfolios (Malachi), and thought about the amazing lawsuits I could now file, given that the law firm of His, Mine & What’sLeftIsYours has bestowed legitimacy with this line of recourse. I suddenly realize that every single one of those trades made are in no way my fault. It’s a glorious feeling, now I can sleep comfortably on my money mattress after I collect my share of the proceeds.
Since I didn’t partake in the Facebook lemmings 2012 tour, unfortunately I won’t get a razor-thin slice of that payout should it ever actually occur, but I have a few that could really break the bank. So for extra credit homework this weekend, I am going to go through every single holding and take my pink highlighter (what?), noting each time the share price “plummeted” at least $1.06 (I don’t want to seem greedy). I jovially suggested that I am considering a lawsuit against everyone suing Facebook, based on the fact that they obviously didn’t read my blogs which delivered a mildly apprehensive message prior to the IPO. It makes perfect sense. Why not? Facebook “investors” are blaming someone else.
If I was a corporate attorney on the Facebook team (a childhood dream for millions, I’m sure), I would simply point out not just my foreboding tales of woe and cautionary notes, but the countless other similar ones out there:
-Attorney for the defense: “I understand the blogger in question is somewhat of a scathing smart aleck, but his writing style is rather unique, sometimes amusing, almost informative and mildly entertaining. Your witness.”
I empathize with the overwhelming desire for some form of retribution, I sincerely do. But “recovering” cents on the dollar with a trade for which you were responsible; really? Let’s not overreact, unless your financial advisor is O.J. Simpson, you might simply be screaming at a fire to stop burning, rather than doing something about it.
Look, I have my own personal feelings for Mr. McClendon, and I have a microscopic soft spot in my heart for anyone that loses money courtesy of market moodiness, or slimy CEOs, or Boards of Directors that obviously never attended a Business Ethics class. But just because someone won a multi-million dollar judgment from a carefully placed cup of hot coffee at a fast food drive-thru, doesn’t mean we should all rally around vultures in pinstripes to get what we think is rightfully ours.
It has been suggested that previous 52-week highs with Chesapeake’s stock price (above $35), were based on a $5 price for natural gas, and this year we have been experiencing levels around the $2 mark. When the price flirted with 10-year lows on a regular, daily basis, of course Chesapeake’s share price fell in line. Don’t get me wrong, I would love it if Aubrey left Oklahoma City with a busted piggy bank and his tail between his legs, along with the Board of Directors, and I have sincere hopes that particular dream comes true. But joining a disgruntled mass of people in a class action suit doesn’t do it for me. For all we know, this could be part of the sports-arena-naming jinx (it pre-dates the Madden jinx). Or it could be payback for swiping the Starbucks Super Sonics from Seattle. I’ve often considered suing Europe for every bit of bad news that causes my portfolio to shed an unhealthy amount of weight.
I am hoping history repeats itself, much in the same way it did with Waste Management Inc. (NYSE: WM), in 2001, after news that the company settled a shareholder class action suit (shares gained over 6% that day). Solid companies can withstand poor market conditions, questionable executive management, hiring Arthur Andersen as their accountants, even a lawsuit here and there. Waste Management currently offers loyal shareholders a 4.3% dividend yield, and I’m sure there were a few investors that bought into the stock in the late 1990’s thinking the company had nothing but the best intentions for everyone involved. And quite possibly a few of those reaped the “rewards” for joining the lawsuit. But much like garbage, natural gas isn’t going anywhere, there is far too much of it. I look forward to enjoying my returns (along with my 2%-yielding reinvested dividends), many years down the road, hopefully with someone else in the captain’s chair.
Motley Fool blogger Kyle Metivier owns shares of Chesapeake Energy. The Motley Fool owns shares of Waste Management and has the following options: long JAN 2013 $16.00 calls on Chesapeake Energy, long JAN 2013 $25.00 calls on Chesapeake Energy, long JAN 2014 $20.00 calls on Chesapeake Energy, and long JAN 2014 $30.00 calls on Chesapeake Energy. Motley Fool newsletter services recommend Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.