Chesapeake Energy's Biggest Investor Raises Stake

NEW YORK (TheStreet) -- After winning seats on Chesapeake Energy's(CHK) board in June, the company's largest investor Southeastern Asset Management is adding to its bet on the embattled oil and gas driller.

Southeastern Asset Management, run by Mason Hawkins, bolstered its leading stock position in Chesapeake by roughly 3.5% in the second quarter, buying up roughly 3.12 million shares, according to Securities and Exchange Commission filings compiled by Bloomberg. The share increase puts Southeastern's stake in Chesapeake Energy at nearly 90 million shares, or roughly 13.5% of the company, according to SEC filings.

Southeastern's additional buying may be seen as a vote of confidence in the Oklahoma City-based driller. Hawkins, who had more at stake than any other Chesapeake investor even before his second quarter buying, argued as Chesapeake shares were dumped earlier this year that there was significant value to be realized in Chesapeake's assets. Hawkins also reclassified his firm as an activist investor at the time that Chesapeake shares bottomed out.

Investors are also likely to watch whether Carl Icahn, a new Chesapeake shareholder who recently gained a board seat after taking a 7.5% stake in the company worth $1 billion, also follows suit in adding to his stock position. In late 2010, Icahn built a position in Chesapeake shares as the stock hovered in the low $20s and talked up his ability to drive change at the company, only to sell out of shares quickly after a rapid rise in value.

Chesapeake shares have risen from a May low near the $13 mark -- which triggered a new round of Icahn buying -- to over $19. Icahn recently said in response to a question during a CNBC interview that even after the rebound in Chesapeake shares it was not time to sell. In Tuesday trading, Chesapeake shares rose slightly to $19.10. The stock has gained over 20% from levels that UBS analysts calculate Icahn bought Chesapeake Energy shares at in May.

Year-to-date shares are off over 14% and nearly 40% in the past 12 months, amid concerns about its balance sheet, loans taken out by CEO McClendon tied to a 2.5% personal investment in wells that the company has drilled over the years, a federal investigation into allegations of price fixing in land acquisitions made by Chesapeake and rival Encana, as well as the decline in natural gas pricing to a level that remains uneconomic for many drilling companies.