After years of stagnant prices, 37% rally in prices for nuclear fuel uranium has helped attract investors back to the sector.
Uranium mining equities have rallied 58% this year
Funds such as Ben Melkman's New York-based Light Sky Macro, Anchorage Capital and Tribeca Investment Partners have been positive on the outlook for the raw material, as a global energy crunch highlights the role of nuclear power in a transition away from fossil fuels.
- price of raw uranium, known as yellowcake, rose to $50 a pound last month, its highest level since 2012 when buying by investors drove the price from $20/lb. to a record high of $136 in June 2007.
- Ben Cleary, of Tribeca Investment Partners in Singapore, whose fund is up 345 per cent net of fees this year. "Clearly there's speculative money coming back into the sector, there were massive price moves in September."
- Sprott's Physical Uranium Trust has catalyzed the price rise with significant buying of uranium, but investors say the broader energy transition is highlighting the key role of nuclear — a low-carbon source of baseload power.
…
energy crisis in Europe and China, and has "placed uranium back in the spotlight", said Rob Crayfourd at CQS New City Investment Managers.
"The political fallout of this energy crisis will be a greater willingness in the west to extend the life of the existing reactor fleet," he said. "It has focused governments on the benefits of secure supply of energy from the nuclear fleet. We expect that to lend support [to prices]."
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"Light Sky Macro sees an immediate and sizeable opportunity in the uranium sector, making it one of our highest conviction views for 2021," he wrote in a note to clients, seen by the Financial Times, earlier this year.
"The growing focus on 'green energy' at a political level and the growing demand for [sustainable] assets in the investment community should turn uranium into one of the most asymmetric trades for the coming years," he wrote, meaning that the possibility of potential gains far outweighs the risk of losses.
Also profiting is Sean Benson, founder of London-based Tees River. His uranium fund, which buys equity stakes in uranium miners, is up 115 per cent this year.
Read the whole piece on the FT here: https://www.ft.com/content/e4a7c920-a5da-4c00-8994-d2bef944e81c?
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