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Category: Investment, Natural Gas
The CHK short Seller's Hedges
By Senior Energy Industry Executive Karl W. Miller
February 1, 2010
Energy Commentary from Karl Miller - Read Bio and More info
For public interest, senior energy executive and institutional investor Karl W. Miller, today issued the following statement through his advisors regarding the U.S. Natural Gas Industry.
Consistent with Mr. Miller's prior analysis titled "Are Hedge Funds and Financial Institutions Holding Natural Gas Producers Hostage" (see weblink: http://www.naturalgasstocks.com/Karl_Miller/news/2011.asp), Mr. Miller has posted the open interest for Chesapeake Energy (CHK) calls, as an example.
Note the February open interest in 29/30 calls for CHK. Now you can see the hedge short sellers have put on in event of a break out against their short futures and swaps. What this tells Mr. Miller is that the hedge funds fear a fundamental breakout of natural gas for reasons Mr. Miller has previously cited, increase in fundamental demand, extreme weather, and industry consolidation (mergers and acquisitions). Mr. Miller has already opined that CHK is the number one industry acquisition target, by not only Mr. Miller's professional opinion, but a consensus of market analyst and retail investors.
Given the continued extreme weather forecast, fact that Natural Gas futures are up over 5% today mid-day, Mr. Miller expects more call buying in the February 29/30 strike of CHK as pressure to the upside mounts significantly on the short sellers and financial institutions artificially suppressing the natural gas prices and natural gas producer stocks.
CHK CALL OPEN INTEREST
FEB 29 Calls 11,293
FEB 30 Calls 28,714
MAR 29 Calls 14,061
MAR 30 Calls 7,923
APRIL 29 Calls 12,300
APRIL 30 Calls 34,038
Mr. Millers Office
About the Author:
Mr. Miller is a globally recognized energy executive and institutional investor with a balance of both financial and energy sector expertise. Mr. Miller began his career on Wall Street during the 1980s and has an extensive background in banking, commodities trading and risk management.
Mr. Miller is acclaimed for multiple ground breaking market calls and investments, including the U.K switching from a net gas exporter to a net gas importer in 2000, called the California energy crisis in 2001, called the Ethanol and Bio diesel boom and bust in 2007, called the renewable energy boom and bust cycle underway in 2008, and most recently called the revival of natural gas in the United States in 2009.
Mr. Miller has a long history in the global energy business and has held a variety of executive management positions both within the United States, Europe and Asia. Mr. Miller has bid on over $25 billion in energy related assets during his career.
Mr. Miller has built, restructured and managed energy businesses for major public energy companies on several continents, including PG&E Corporation, Electricitie de France, El Paso Energy, Enron Corporation and JPMorgan Chase.
Mr. Miller holds an MBA in Finance from the Kenan-Flagler Business School at The University of North Carolina, Chapel Hill. Mr. Miller also holds a B.A. in Accounting from Catholic University located in Washington DC.
Disclaimer:
This column, Energy Commentary from Karl Miller, is the opinion of Karl Miller.
Content found in the articles is subject to the terms found in the InvestorIdeas.com disclaimer and does not represent a recommendation of investment advice. Investors should seek the advice of a qualified investment professional prior to making any investment decisions.
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