I own 10 plus uranium stocks from large to small, but am continually looking for undervalued ones to add. I found your thread here excellent. Do you provide recommendations I can review?
Next U private placement that you are interested in let me know. I have a group of sec accredited Americans that will want in. I like your portfolio! Also if you would like to see the options plays our trust is running and considering it may/may not bring you some value.
Hi Steve, sure will. I usually interview and open the interview for 10-15 people, CEOs of companies I like and think of doing a private placement with. On Thursday, I interview Troilus gold. I interviewed Anfield already and speak from time to time to Western. Keep up to date with the blog and you will see the lineup. Interested in seeing the options although I use it more as a hedge in general.
Thanks Maxime! Again a great analysis especially steps #1 and #3 might be great catalysts. I have my problems to get too bullish about step #2. I watched the video and found it very amusing. Especially the young guy is funny. My take:
- Sprott will not be "cornering" the market with this deal as this guy in the video puts it. To my understanding they take over a management contract to eventually manage an uranium fund. They will generate fees from this contract and not invest in uranium themselves. Just like ishares don't own ishares S&P ETF to take a long position in the US equity market. They earn a management fee to provide a vehicle for others without taking market risk. If Sprott would have wanted to take exposure this would certainly not be the way to do that. There is a positive element coming with this since the new management entity will have a financing line to buy outright spot in the market. But I wouldn't expect them to gamble with this money. I guess the idea of this financing option is to provide liquidity for the fund and not take an outright long position to leverage the fund. But maybe I got that wrong!?
- Former UPC will now be listed in New York instead as today of only in Canada. This certainly not bad news since this market place is more liquid. They argue that hedge funds and institutionals will now be able to enter the uranium market via a listed vehicle. Although I doubt that a hedge fund wouldn't have been able to buy UPC in Canada or Yellow Cake in London in the past (if they would have wanted) I agree that this could attract some retail interest. Maybe we see the retail crowds moving into the uranium space for a short while but how long are these guys going to stay if they come?
- Sprott will change the market maker mechanism for the former UPC vehicle. Instead of allowing the fund to have a 20% premium or discount to the underlying uranium holdings Sprott will now only allow a very narrow spread to the underlying Uranium NAV. Is this a game changer? Certainly not for me. As I understand this mechanism goes in both ways and when uranium prices fall for whatever reason the management/market participants will redeem shares just like with any ETF, right?
Hi Joerg, first thanks for the comments and reading my post! I could not agree more with what you pointed out except I think we differ on the impact that the Sprott will have. You are correct that in itself, a new manager for the fund would not be bullish. The fact however that Sprott is renowned and has 200k+ customers to market this too changes the demand side of the equation. We can debate as to how successful they will be but let's leave that out for a second. Where I think it makes a difference and we will need to wait for the prospectus to be shared is on the buying and selling of the physical uranium and let me explain why I think so. The Peninsula Energy CEO illustrated the spot market as follows. There is uranium available on the spot market, just not at 30$. Sprott will be an indiscriminate buyer of uranium to fulfill its duties to match the fund value to net asset value. We know that about 20mls pounds are traded on the secondary market usually in a given year. Add the catalyst that I mentioned in my article and now think about what will happen to the spot market when Spriott comes in a must-buy for ASAP delivery uranium. Most of the recent purchases from Denison and others have been delayed until the end of 2022. If however, you want pounds now, you will finally have real price discovery. I am not saying that this alone would drive the spot to 40$ but I am confident that it will have an impact and bring it closer to 35$. I am not sure at what $ amount utilities will ring companies to contract but I guarantee you that someone will see the light of day and say: " this party of cheap uranium is over".. That's why I think Sprott is the big news. They will finally enable price discovery.
1. You write... "Sprott will be an indiscriminate buyer of uranium to fulfill its duties to match the fund value to net asset value.". I would just add that Sprott will be... buyer AND SELLER....
2. It's true that the spot market is traded thinly and Sprott might become a bigger source of demand than UPC was without them. But as long as there is no big contracting activity low cost producers could come back as sellers once the price starts to pick up a little.
Keep in mind that I'm invested in the space myself. So I'm playing somewhat devil's advocate here. I do believe myself that spot prices will rise over time and contracting activity will eventually be picking up but we should bet the farm on the timing of this
again, we are in violent agreemeent. The timings I alluded to above are to remind myself where I am in the cycle.. I am already invested so whether this takes 3 months, 6 months, or 24 months, it does not change my thesis. I was reflecting and comparing what I did wrong with the rest of my portfolio in PM since January 2020 and one of the things I did wrong was not having this mental timing map. I would have been better served if I had.
I own 10 plus uranium stocks from large to small, but am continually looking for undervalued ones to add. I found your thread here excellent. Do you provide recommendations I can review?
I obviously have lots but I don't share it yet..
Next U private placement that you are interested in let me know. I have a group of sec accredited Americans that will want in. I like your portfolio! Also if you would like to see the options plays our trust is running and considering it may/may not bring you some value.
Hi Steve, sure will. I usually interview and open the interview for 10-15 people, CEOs of companies I like and think of doing a private placement with. On Thursday, I interview Troilus gold. I interviewed Anfield already and speak from time to time to Western. Keep up to date with the blog and you will see the lineup. Interested in seeing the options although I use it more as a hedge in general.
Thanks Maxime! Again a great analysis especially steps #1 and #3 might be great catalysts. I have my problems to get too bullish about step #2. I watched the video and found it very amusing. Especially the young guy is funny. My take:
- Sprott will not be "cornering" the market with this deal as this guy in the video puts it. To my understanding they take over a management contract to eventually manage an uranium fund. They will generate fees from this contract and not invest in uranium themselves. Just like ishares don't own ishares S&P ETF to take a long position in the US equity market. They earn a management fee to provide a vehicle for others without taking market risk. If Sprott would have wanted to take exposure this would certainly not be the way to do that. There is a positive element coming with this since the new management entity will have a financing line to buy outright spot in the market. But I wouldn't expect them to gamble with this money. I guess the idea of this financing option is to provide liquidity for the fund and not take an outright long position to leverage the fund. But maybe I got that wrong!?
- Former UPC will now be listed in New York instead as today of only in Canada. This certainly not bad news since this market place is more liquid. They argue that hedge funds and institutionals will now be able to enter the uranium market via a listed vehicle. Although I doubt that a hedge fund wouldn't have been able to buy UPC in Canada or Yellow Cake in London in the past (if they would have wanted) I agree that this could attract some retail interest. Maybe we see the retail crowds moving into the uranium space for a short while but how long are these guys going to stay if they come?
- Sprott will change the market maker mechanism for the former UPC vehicle. Instead of allowing the fund to have a 20% premium or discount to the underlying uranium holdings Sprott will now only allow a very narrow spread to the underlying Uranium NAV. Is this a game changer? Certainly not for me. As I understand this mechanism goes in both ways and when uranium prices fall for whatever reason the management/market participants will redeem shares just like with any ETF, right?
Hi Joerg, first thanks for the comments and reading my post! I could not agree more with what you pointed out except I think we differ on the impact that the Sprott will have. You are correct that in itself, a new manager for the fund would not be bullish. The fact however that Sprott is renowned and has 200k+ customers to market this too changes the demand side of the equation. We can debate as to how successful they will be but let's leave that out for a second. Where I think it makes a difference and we will need to wait for the prospectus to be shared is on the buying and selling of the physical uranium and let me explain why I think so. The Peninsula Energy CEO illustrated the spot market as follows. There is uranium available on the spot market, just not at 30$. Sprott will be an indiscriminate buyer of uranium to fulfill its duties to match the fund value to net asset value. We know that about 20mls pounds are traded on the secondary market usually in a given year. Add the catalyst that I mentioned in my article and now think about what will happen to the spot market when Spriott comes in a must-buy for ASAP delivery uranium. Most of the recent purchases from Denison and others have been delayed until the end of 2022. If however, you want pounds now, you will finally have real price discovery. I am not saying that this alone would drive the spot to 40$ but I am confident that it will have an impact and bring it closer to 35$. I am not sure at what $ amount utilities will ring companies to contract but I guarantee you that someone will see the light of day and say: " this party of cheap uranium is over".. That's why I think Sprott is the big news. They will finally enable price discovery.
Agreed!
I would just make two points:
1. You write... "Sprott will be an indiscriminate buyer of uranium to fulfill its duties to match the fund value to net asset value.". I would just add that Sprott will be... buyer AND SELLER....
2. It's true that the spot market is traded thinly and Sprott might become a bigger source of demand than UPC was without them. But as long as there is no big contracting activity low cost producers could come back as sellers once the price starts to pick up a little.
Keep in mind that I'm invested in the space myself. So I'm playing somewhat devil's advocate here. I do believe myself that spot prices will rise over time and contracting activity will eventually be picking up but we should bet the farm on the timing of this
I meant: #we should not be the farm on the timing of this
again, we are in violent agreemeent. The timings I alluded to above are to remind myself where I am in the cycle.. I am already invested so whether this takes 3 months, 6 months, or 24 months, it does not change my thesis. I was reflecting and comparing what I did wrong with the rest of my portfolio in PM since January 2020 and one of the things I did wrong was not having this mental timing map. I would have been better served if I had.