10/16/2024 – Southwestern Energy Corporation (SWN)

Attention, those of you who own Southwestern Energy Corporation (SWN): SWN has completed a merger with Chesapeake Energy Corporation (CHK). The merger has resulted in a new company, Expand Energy Corporation (EXE). As part of the merger, all holders of SWN have received 0.0867 shares of EXE in exchange for every 1 share of SWN that you previously held.

As a result, some alterations need to be made to your Snider Investment Method worksheets.

On your Individual Stock Purchase Record, you will need to adjust each outstanding purchase you had of SWN prior to the merger. Take the quantity of shares you purchased in each transaction and multiply it by 0.086; for example, if your purchase level was 100, you will take each purchase of 100 shares and multiply it by 0.086, leaving you with 8.6 shares.

You can then adjust the price paid for each purchase by dividing it by 0.086. For example, if your initial purchase price was $30 for SWN, you will divide that figure by 0.086, leaving you with an adjusted initial purchase price of roughly $348.84 for EXE going forward.

Lattco PRO & Lattco AutoPilot clients: if your SWN position was open when the merger was completed, the adjustments to the EXE position have been made for you and will be reflected in your account on next Trade Day.

SWN, and now EXE, is in a frustrating position as it has declined significantly since we initially purchased shares.  In most cases, it has been and will remain in winter until the price appreciates.  The merger may create additional difficulty in implementing the standard Snider Method.  

At this time we are not recommending clients sell the shares or take any actions outside the normal Snider Investment Method rules.  If you reach a point where the market price of EXE is similar to your last adjusted purchase price, please contact us.  We will evaluate the position together to decide if transmogrification is the appropriate course to take.