Due to the renaissance of nuclear energy and the related implications for investors, finews.com and Arnova Capital organized a special event in early 2024 in Zurich. After some profit-taking in January and February, the uranium price consolidated around $83 per pound in March. Where do we go from here?
Nuclear energy has been an investment theme for some time now. With this in mind, finews.com and Arnova Capital teamed up for a special event in Zurich's prestigious Zunfthaus zur Saffran. As the speakers expressed, there are currently structural changes in the market.
Almost 60 new nuclear power plants are currently under construction worldwide. As a result of the Paris Climate Agreement, more and more countries are favoring this type of electricity production to reduce CO2 emissions. Lately, the uranium price has also been driven by positive statements of some analysts: above all, the research from Goldman Sachs regarding a long-term upward trend in demand.
Price Gains in March
The shares of Cameco, the largest Western uranium producer, have risen by more than 20 percent since March 2024. Thus, the price gains were also higher than the price increase for uranium itself, which explains the sentiment in the market. Please find below the event's video:
More than even other commodity sectors, uranium miners have a history of boom-bust cycles. «Certainly, this time the fundamentals are better than ever before, but this is not a buy-and-hold investment for us,» Pendo Löfgren, Chief Investment Officer and co-founder of Arnova Capital, says. «Our base case is a very strong price move up in uranium price itself and the miners followed by a sharp drop to a plateau which will be much higher than before but probably still too low for a majority of uranium exploration companies.»
Largest Exporter of Radioactive Material
The recent floods in Kazakhstan, where Kazatomprom operates several mines, fueled new concerns on the supply side and led to a significant price increase. Kazatomprom, as the largest exporter of radioactive material and one of the most important suppliers to the nuclear industry, also has problems with ramping up mines. A problem that occurs at the worst possible time.
«Mining companies can experience serious incidents causing its shares to take significant hits, whereas this is impossible for the uranium as a commodity itself,» Löfgren adds. In the equity space, we generally prefer Western companies that operate in largely secure and rule-of-law-based countries. We have positions in Canadian, American and some Australian uranium producers.»
Fund-like AMCs
Arnova's internal strategy is mirrored in a fund-like AMC which is called «Arnova Optima Occasio». The other thing the firm does, and where Arnova has over 20 years track record of positive returns, is its systematic strategies portfolio. This one is mirrored in the AMC called «Arnova Summa Summarum».
