Category Archives: $CCJ
Uranium Price Update
Uranium prices continue to get compressed towards $0, as a few week hiatus of the blood was met this morning with the first real print in weeks – and it was an ugly one.
My impression is that the uranium market has been dead for months now, while the major players of nuclear utilities and uranium cake producers play a game of chicken with one another. And unfortunately, because nuclear reactors can run so long without refueling, this game can go for a long, long time.
I’ll take a moment to remind you of advice I’ve given before; every now and again it needs to be repeated.
Stay out of the small uranium miners.
Just because I like CCJ does NOT mean I like CCJ’s half-starved siblings. CCJ has a war chest and controls 20%+ of the market. CCJ’s competition sometimes isn’t even producing uranium. If you’re not playing the waiting game with a billion dollar budget, at minimum, I hate to tell you this pal…but you’re prey.
I’m in CCJ from the onset because I know how this ends; countries are not going to diversify away from nuclear power. That would be stupid. However, that doesn’t mean Japan wouldn’t like very much to see its public utilities able to load up on fuel contracts at dirt cheap prices. Or that every other reactor globally wouldn’t like to devour Japan’s reactor fuel should they be forced to market.
In the meanwhile, without a price recovery, CCJ’s stock is going to be horrible. $13 is not out of the question. But they’ll survive, and if you think they have pricing leverage at 20% market share, well…it’s only going to get more ridiculous.
I will buy my next batch of $CCJ if it hits $15.
Trash Rockets And Churn Hurting My Morale
I am becoming increasingly cautious as this rally is now sustained on the backs of defunct maritime shippers, the airline industry, and pharmaceuticals. Most of this trash would never be permitted to find its way into my holdings.
As summer sets in, the theme will settle on a single discord: disappointment.
The other day, I had a family gathering about 100 miles away. Along the trip, I counted almost 300 acres of land for sale at “NEW LOWER PRICES”. This is what I saw along my way; I didn’t go out looking.
There is a shadow inventory overhanging this market, and the chord that is holding it up is made of the ability of an aging Baby Boomer generation to tolerate pain and discomfort – two things which that group of whining malcontents has never been particularly prone to enduring.
And Europe continues to circle the drain in a slow bleed. You can stop looking for the inflection point, where suddenly everything starts to become increasingly easier and growth picks up. Thanks to binging on positive carry trades for two decades the system has been made recalcitrant and calcified. The arteries are hardened and strain for blood flow.
Thanks to my maneuvers in the Fall, I’m up 21% since November. Yet, more than half of this is contained in just two positions forcing higher by large margins – CCJ and BAS. It could all vanish in a hurry.
This is why I pushed to raise 30% cash recently, although my exposure to CCJ and BAS remains extreme. I have faith in these two positions; they will continue to benefit and outperform remarkably over the next few years. But the swings will be gut churning and disruptive.
Factoring in EUO, my net artificial cash position is closer to 40%. If we crater, EUO is going to spike (more than it has been). I’m also treating BXG like a cash position, as there is an all cash offer (even though I’m hoping/expecting the deal to fall through). That puts me at ~45% cash.
I’m almost ready for the fireworks to get started.
Deafening Silence
Alright, so the instant I switched over from “merely rapaciously expectant” to “full blown, mind numbingly jubilant”, the market turned on a dime and started punching participants in the face. That should have been clear before I did it. It always happens like that.
So on behalf of everyone whose kids can’t attend college now, I’d like to say, “I’m sorry.”
In times like this, it can always be difficult to answer that most important of questions. No not, “am I properly managing risk.” I’m talking about the even more important inquiry…”Whose fault is this?”
Now, there are several ways you could play this. Personally, I’ve decided to blame it on people using trailing stops. Dicks…littering their homes with half eaten burgers strewn around in McDonald’s bags all over the floor…all while smoking and ashing right on top of them…just begging to burn their house down…
There, you see how I did that? Make sure you ramble a little and trial off at intervals, to really get the “I’m-slightly-unhinged-talking-almost-to-myself” effect.
At any rate, the markets are getting lit up, and all is despair. If you’ve been living the Pisani lifestyle, I’m afraid you’ll be made to eat your hat by a short seller, who will watch you doing it while flinging small handfuls of sand in your eyes. It hurts, I understand. You have my sympathy.
Thankfully, I had the foresight to sell into the strength as opposed to throwing weight on the downdraft and cutting myself down by 5%+ all in one go.
My anticipation, for the moment, is that we will finish this selloff quickly and then surge higher.
I made a (now obviously) misguided purchase of AGQ a few days ago, but other than that I’ve been very good about holding that cash and keeping my hands off it. EUO, my hedge, is running, as this selloff seems to be driven as much by dollar strength as anything else.
The REITs are holding up decently well; AEC and CLP having nothing but cash and sterling operations.
BAS is not so fortunate.
If you owned BAS and didn’t know this quarter was going to be hard: please dispatch yourself in a grueling fashion. That was the most obvious loss in the history of loss-taking. Still BAS is way up from last year and I will consider adding on dips.
CCJ got hit yesterday as well, and RGR seems to be collapsing predominantly on profit taking. Both are buys; both will see much higher prices.
Finally, silver. Silver is the butt of jokes being told on Twitter; that place where everybody sees everything coming and makes 500% annually. Well, the jokes going to be on all of you. Silver is going to explode higher when you least expect it. I remember the circus at $15 /ounce. How it was going single digits. Then it lit you up.
I remember when it went from $50 to $25, and the same people were guffawing how it was going back to $15. Then it lit you up again.
Now it’s off to below $30 (meanwhile the Fed is dropping money like it’s worthless), and the same folks are howling that it’s all done for.
Breaking Out
Lording from the 9th floor, I can see men and women walk by, as if ants, scattering across the ground below. There is absolutely nothing that can stop me now. I’m high on this bull market, and cast nothing but aspersions from my window.
It’s a dreary day, but I don’t care.
CCJ is breaking higher. RGR is breaking higher. BAS is breaking higher. God, basically everything I own is higher.
Except for AGQ; that is lower. But I just can’t care. Too many gains are overloading my system. I am experiencing pure ecstasy here. It’s a party, and bears aren’t invited. Keep your crying pessimism to yourself – thank you very much.
The 9th floor offers no condolences to you for missing out on the spectacular fun. Our streamers are flying higher, our windows are spotless, and we’ve got money to make.
First Rough Day In A While
Alright, so today was very nasty for me. RGR, CCJ, and BAS all cramped up, and are busy drowning in the pool. I can guess why CCJ is having trouble – their earnings sucked wind. But RGR and BAS are something of an enigma. RGR has no news pushin git, and the only thing that happened to BAS was it caught a downgrade from some analyst.
Of course, all three names are up so much in the last month it could just be some profit taking. CCJ is pushing back below those magically colored lines, which I have learned is the ultimate arbiter of reality. Ergo, it must be in serious trouble…
Anyway, throw in the price of silver with those two and this was a bad day. The first bad day I’ve had since November or October.
Don’t Panic About CCJ’s Latest Earnings
CCJ’s 2012 revenue attributable to shareholders plummeted 41% from last year. The 4th quarter was an absolute bloodbath, with revenue off 83%. Most of the carnage is from a massive write down the company took on a project called Kintyre. The rest is from uranium prices being cut down mercilessly.
However, you should have known this was going to be ugly, if only from the most recent sales prices of uranium-308.
When prices go into free fall like that, it means one thing: no actual sales are occurring.
The end of 2012 was horrible for uranium sales. Because reactors don’t require a continuous feed of fuel, there exist periods where their operators may elect to sit back and not come to market. So really, almost nothing was done at the end of the year. This makes sense – with two major elections (Japan and the US), global uncertainty, looming recession, and no imminent need for uranium, producers were in the uncomfortable position of having no buyers. If you were a lowly player, desperate for some sales to keep the doors open, the last three months were not a good time for you.
But that’s all drawing to an end soon. Japan and the US have reaffirmed nuclear energy. Emerging markets are going full bore. Russia is done flooding the market with cheap HEU stock.
We are preparing for an epic resurgence of nuclear fuel prices.
Would you care for a second opinion?
I’ve been hammering on this point since the Fukushima reactor was still busy melting down. I’ve mentioned all the points myself – expectations of the ability of countries to drop nuclear power are unrealistic. One does not simply drop 30% of their grid. And with the immense competition for power sources globally, ignoring such a potent fuel is madness.
Now, slowly, all of my predictions, as laid out literally in the middle of the tsunami crisis, are playing out. Japan is backtracking. The US has confirmed they intend to move forward with construction of the first reactors built in this country is 30 years. The emerging markets are embracing nuclear to diversify their grids. Environmentalists have even begun marginalizing the anti-nuclear activists in their ranks – crushing their ability to be heard; mocking them openly.
Next up, Europe starts caving, led by Germany; which has no choice but to acknowledge that there is no way they can replace their nuclear facilities with windmills and solar panels.
And as these realizations hit, the price for nuclear fuel is going to skyrocket. With it, CCJ’s earnings will go from the worst in its history, to the very best.
Bring it, kids. I have your numbers. It’s time to pay up.
