Aubrey McLendon is the former CEO of Chesapeake Energy (CHK). He’s a swing-for-the-fences kind of CEO; he almost bankrupted himself with leveraged holdings of his company’s stock when it plunged in 2008. In 2011 Forbes named him America’s most reckless billionaire. He famously negotiated a sweetheart deal allowing him to personally invest in individual wells drilled by the company. Earlier this year he was forced out by Carl Icahn. McLendon no doubt has many talents, but a strong sense of fiduciary duty is not among them.
American Energy Capital Partners, LP is McLendon’s new venture. It recently filed for a $2 billion IPO. American Energy is sponsored by American Realty Capital, run by Nicholas Schorsh. Schorsh is also the backer of Inland American Realty, an unlisted, registered REIT. We wrote about Inland American in June. It’s not clear why a company would be registered but not listed. Being registered allows sales to the general public, while not being listed means there is no public market to allow investors liquidity to sell. No public market liquidity means there is little incentive for sell-side form to provide research – which in the case of Inland American was a good thing because their IPO included numerous conflicts and up to 15% of your invested capital as fees. Their REIT has performed miserably since then.
McLendon and Schorsh have both demonstrated a facility for placing their own interests ahead of their investors. It seems especially appropriate that they have joined forces in this new partnership.