Chesapeake Energy is going crazy buying leases and drilling for oil. Their stock prices is being punished because they are spending so much money. But it seems a lot more rational than investing in Treasury bonds.
http://seekingalpha.com/article/312715-why-won-t-the-stock-market-believe-in-chesapeake-energy-s-business-model
"Chesapeake has repeatedly amassed leading land positions in highly valuable resource plays and then recovered 100% of the cash Chesapeake invested (while still retaining 75% ownership of the play) by bringing in Joint Venture partners.
Spend a billion dollars for a million acres. Then sell 25% of the acreage for a billion dollars. Keep 75% of the acreage at a net cost of zero.
And the stock market is punishing the stock price because Chesapeake plans to continue to spend money locking down land.
It borders on the absurd. Chesapeake has a net cost of zero on millions acres of land worth billions of dollars. Yet the stock market wants Chesapeake to stop doing this.
Not me. I say spend away boys. I am fully aware that the undervaluation of Chesapeake’s shares can last for years, but at some point the true value of all of this acreage has to be realized."
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