Icahn Enterprises LP (IEP)’s Big Stake Could Bode Well for Regular Investors

Chesapeake’s Advantages

Although Chesapeake’s financial situation leaves something to be desired, the company benefits from a diverse portfolio of stable, productive assets and a strong foothold in a crucial geographical region. Since it is relatively close to the Gulf Coast ports that will serve as hubs for future gas-exporting activities, the company will enjoy lower downstream transportation costs than rivals that operate exclusively in Canada and the north-central United States.

Meanwhile, the firm’s recent leadership shakeups are sure to restore rank-and-file investors’ badly shaken faith in the company. As its most visible investor, Carl Icahn will have a big say in how this plays out. Finally, Chesapeake’s stock price appears to have turned the corner. It looks undervalued relative to many of its closest competitors. A period of boardroom stability looks likely to convince investors and fund managers to come in from the cold.

Long-Term Outlook: Invest or Stay Away?

On balance, Chesapeake looks like a solid investment for anyone who wishes to gain exposure to the natural gas market. However, it is not without its problems. Those who do not feel particularly strongly about the short-term future of the American natural gas industry may wish to “hedge” their Chesapeake investment with a long position in Icahn Enterprises LP (NASDAQ:IEP). With a solid dividend yield and a growing asset portfolio, the company offers exposure to a number of growing industries without presenting undue risk. After all, Chesapeake’s long-term growth will benefit Icahn Enterprises for as long as the company holds its stake.

The article Icahn’s Big Stake Could Bode Well for Regular Investors originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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