Chesapeake Energy: What Justifies Value? (CHK)

We like natural gas and we like Chesapeake Energy (NYSE: CHK). However, we see no justification for the substantial run up in CHK stock price to excessively speculative level of $30/share.

We get the strategy that the company has built itself upon, but that model was based upon a land value/reserve value analysis, or old school reserve valuation analysis for natural gas valuation. Additionally, CHK was the king of buy and flip, perhaps they even inspired the financial institutions to do the same thing on the mortgage backed securities (MBS) market.

Problem is, that model is no longer in effect, no longer profitable, and irrelevant in a "just in time" domestic natural gas market, which is the U.S.

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