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Ok interesting thanks. Yes no doubt about it the collections seem to have been good news. Just the persistent discount to last valuation is a little concerning or suggests that there might be further downside considered. Perhaps it is simply in line with other comparables though, checking into alternatives to compare.
Any strong views on what to expect in the portfolio valuation update this week? I would have thought potentially unfavourable again but maybe that is already accounted for?
Agree with all the recent messages below - a little disappointing that the share price hasn't held up but everything has been sliding a bit and frankly let's remember this particular sector is still quite niche and below the radar for the majority.
Spot price has been sliding a bit (recently holding steady though) and the macro market has been jittery. Conversely nothing has changed on the fundamental demand side of the uranium story and actually there has been plenty of positive news of different countries announcing favourable plans for the nuclear capacity expansion, etc. It does make it hard to see a sustained price dip in uranium (especially if we head into a period of inflation in which commodities normally perform) and given the large discount and what should be a low beta to the rest of the market I can see few reasons not to sit and be patient on a position or otherwise build imho.
@TakingMyTime
Overall if you are interested in the industry/thesis I would say this is a good and conservative name to start in. You are essentially getting exposure to the narrative without the risk/leverage of a junior miner/developer. Buying in at a discount to NAV also gives you some cushion assuming the spot price doesn't drop dramatically. In terms of further reading I would suggest maybe reading the report for Uranium Participation Corp which is a similar business model to YCA and also look at the latest Wold Nuclear Fuel report published by the WNA which shows increased demand across all scenarios (lower/base/upper) and that should give you some more colour before you make decisions.
I wouldn't compare it to an ETF because whilst the few ETF's hold this name, they have all the exposure of the others in the sector including producers/developers/explorers. That might be a next step if someone gets more comfortable with the story and wants to add more risk. In terms of product swaps I believe this is just opportunistic depending on where the material is needed, for example Cameco's delivery point at Port Hope is currently at a premium. Yellowcake in the case you mention can essentially just do a timeswap and collect a premium for the trouble.
Hope this helps and good luck with your research.
In reference to some of the below comments.
Regarding buybacks...yes agreed it is great they support the share price on down days and let's remember they now have a decent amount of firepower in order to be able to do that and still the share price trades at a large discount to NAV.
Furthermore, regarding Cameco restart of Cigar Lake - this was actually somewhat expected and was not a surprise as some people claim. Secondly they clearly state they are not going to be able to make up for lost production already this year nor are any new lbs mined going to be going into the spot market. Even before any coronavirus etc situation this year there was a supply/demand inbalance so all this has changed is exacerbating that.
Final and most important point - let's consider how ridiculous it is that people are discussing whether the second largest miner of uranium in the world should actually be producing/operating or not. We have everyone including industry bodies acknowledging the growing deficit and we are in a world where a companies share price goes up when it says it is not producing and drops like a stone when it says that it is. So clearly the market acknowledges there is some imbalance going on but the right hand is not talking to the left hand. It's Alice in Wonderland next level upside down. I think you want to hang around for when the industry rerates.
Very good announcement and number attached to it. Helps the risk profile even more now.
It is true idled mine capacity cannot be turned on that simply. Even if the recent production curtailments (around covid) are restarted tomorrow it doesn't change the fact that the two largest and most economical miners of uranium in the world have curtailed major amounts of production already pre-pandemic - Cameco shut down McArthur river / Kazatomprom announced in 2019 they would curtail production through 2021. Neither would make these moves unless they had to. That in itself should speak volumes.
As for one of the comments below being that YCA is a glorified investment trust betting on one commodity, I can see that without the full S&D macro picture one might not be persuaded but let's remember that it is one of only two publicly listed means by which to only go long the commodity (rather than take large amounts of leverage of other risks through miners). That is only two global options. When you think of any other commodity imagine how many ways and platforms there are to express a bullish or bearish investment. Its focus and relative uniqueness is its major attraction.
Thanks also, this is excellent. I can see why my calculation was a little too simple now though as I kept on getting even steeper discounts - not that the real one isn't steep enough! Good to see some ongoing discussion getting going as this is quite a niche area with very few options for the retail investor to get involved.
Very interesting points made above. I agree if you look at historical discount/premium to NAV even if you account for a uranium price drop to previous year lows it is still at value.
One question though to bullen - in your post below you use 30 usd/lb, but as far as I can see the latest price is a 33 usd/lb bid for Cameco delivery which is where YCA has storage. Perhaps my figure is out of date, or are you using one of the other delivery points which is currently lower to be conservative?
I suppose it's a bit of a staggered approach, averaging in every day. However, is there a process by which they could be encourage to do more significant purchases in a quicker time frame? Especially when issue is clearly illustrated by their only comparable company having such a smaller discount?
Agreed interesting idea. The only major difference is size and the fact that UPC also holds a small amount of UF6. I would say overall given market presence and size it is likely that UPC always has the edge over YCA but not at this steep a price differential. Personally I am bullish enough to be patient and sit long in either or both without off-setting one against the other but it is a very good idea to implement if someone's risk tolerance changed.
I am still getting a higher discount for some reason over 30%. Perhaps the shares outstanding I am using is wrong. However, even if we take yours at closer to 30%, it is still attractive when you consider it is one of the only two direct options globally for retail investors to hold the commodity. Furthermore, the other vehicle trades at half the discount currently.
It is one of the few attractive non-leveraged plays out there currently in this environment.
Does anyone have a good idea of the cash burn on Purplebricks?
Only recently started looking at this stock but from what I can see cash on the balance sheet wise it looks pretty healthy risk reward to weather the downturn and with a large major shareholder which helps somewhat.
Some decent volumes going through and - dare I say it - sales being absorbed by the bids reasonably well unlike previous periods after a share price rise. Most things are feeling toppy but something still feeling positive about this in lieu of slow emergence from lockdown etc...
This discount is still almost absurd IMO - there aren't really many other options for the retail investor to get involved and when you look at pretty much its only other counterpart for North America (UPC) which has narrowed to approximately 15% discount (still very good for that too)...
I believe that when I first looked at it, it was closer to par with NAV and actually at a premium if anything. If I use 33 usd/lb (to be conservative) and a current share price of c. £2.26 = approximately getting a discount to NAV of 27.34 presently today so something seems a little different in my calc to yours but still healthy discount.
Interesting to take some profit perhaps on a partial positions as it is looking a bit over bought from a technical standpoint. If the market dips lower significantly or indeed just PF, then it could be worth buying in the portion sold again.
Still sitting there, meanwhile spot price ticks up another positive little bit at a time...
A process that I might follow for as long as I can or have liquidity is to average in once a fortnight or month whilst the discount to NAV remains below 20%. I am struggling to find the bear case despite checking everything, however could certainly be wrong if missing something - Do your own research.
IMO there is a large chance this discount will narrow sooner than later given the changing supply fundamentals. Comparison with Geiger is a good example - Yellowcake doesn't have leverage/upside of the miners but inherently less risk in the strategy at this present moment in time...would have thought there was premium in that!