My uranium portfolio

There has been a lot of exciting news this week, but I see a lot of great information about this already. I am therefore not going to repeat what others have written, but I can say that it looks very positive for the future in uranium. Instead I am going to write about my uranium portfolio.

Disclaimer

I do not not say that this is the best possible allocation to the uranium sector for people. This post can not in any way be construed as investment advice. What I own today can change drastically on short notice for a wide variety of reasons. I will not be responsible for the results anyone might have for adopting my positions or ideas. Some of the positions I sit on now might not be the same if I started from scratch today, but are in the portfolio because of my strategy and investing rules I have given myself.

When I shared my post “How I have constructed my uranium portfolio” I got a lot of questions about what shares I have in my portfolio. At the time I was not interested in defending my positions to other people than myself, and people have different reasons why they own a specific company. I have some shares that many really do not like, and I am also missing some of the more popular shares in the community. The reason why I do not own one of your favorite shares is that you can not be on top of every company. Some of my smaller positions are small because I got late to the party and I do not generally sell out of my positions. At least not now as we are at the beginning of the bull run.

In my previous post I said that I have a rule to my investing strategy, and that is that I generally do not sell down in any of my positions except in very special circumstances. I have to admit that I have made two exceptions to this rule. One was that I sold out of my Uranium Participation Corp position. I only kept this position as a low risk alternative in the sector until I was certain the bull market was on. I followed some advice from one of the Youtube videos of John Polomny (@JohnPolomny) of just being exposed to the uranium price during the bear market in the uranium shares, and avoiding company specific risk with dilution etc. This has been a very good strategy for people who came in before 2020, but during 2020 I decided the bear market was over and switched into other positions. The other exception I made was selling down some of my position in Horizons Global Uranium Index ETF. I entered into this position when I did not have that much experience in the sector and did not end up with just the worst possible picks in my portfolio. When I started to get my bearings I decided that I could scale this position back a bit and deploy more by my own discretion. There are always exceptions to a rule, but going forward the rule is still; just add to positions, do not sell.

Enough teasing. Here is my portfolio:

CompanyInvested %ReturnPortfolio weight
enCore Energy Corp7.49%547.83%19.11%
Energy Fuels Inc15.71%133.96%14.48%
Global Atomic Corp7.30%373.85%13.62%
Ur-Energy Inc.13.83%79.49%9.78%
NexGen Energy Ltd6.62%213.51%8.18%
GoviEx Uranium Inc10.97%57.50%6.80%
Denison Mines Corp7.45%85.71%5.45%
Bannerman Resources2.70%362.50%4.93%
Laramide Resources Ltd.7.09%60.00%4.47%
Forum Energy Metals Corp6.09%44.44%3.47%
Horizons Global Uranium Index ETF3.52%134.13%3.24%
Vimy Resources2.61%125.00%2.31%
Fission Uranium Corp4.65%17.86%2.16%
Deep Yellow2.25%36.51%1.21%
Standard Uranium Ltd1.14%4.35%0.47%
Baselode Energy Corp.0.56%45.95%0.32%

The first thing you should notice is enCore is my biggest position with a portfolio weight of 19%. Many people do not like this company for one reason or another, but you can see it is just 7.5% of my invested amount. The reason why the position is so big is because of the returns. I have built this position in tranches and have positions at CAD 0.13, 0.16 and as far up as 0.67 with the biggest amount around the 0.16 tranche. My rules have stopped me from selling out of the position when it has been on a tear, and by that limiting my upside. I will not be married to this stock, but from experience I have made the last 10 years is that when you sell a share in an uptrend, the next leg is usually up. I will only make a reassessment when we have a definitive spot price move and reach one of my spot price targets.

My biggest positions when it comes to invested amounts are Energy Fuels (15.71%), UR-Energy (13.83%) and Goviex Uranium (10.97%). Energy Fuels and UR-Energy were bought in anticipation of the Section 232 decision in July 2019. (Section 232 was a bill that suggested quotas or tariffs on imported uranium). They were an even bigger percentage of the portfolio then, and were probably about 40%. I was already over 50% allocated to uranium at the time so when the decision was announced, and was negative for the US producers, I noticed. The 30% drop in a day for the two companies had a very negative effect on the portfolio. I had overestimated President Trump’s protectionist side after seeing the ongoing trade war with China. This was the reason why my bet fell apart. I bought Energy Fuels and UR-Energy when they were trading at a premium compared to the rest of the sector in anticipation of this announcement. This premium disappeared in an instant and made for a very interesting work day when it happened. It is easy to be caught up in narratives like this, but I do not know if I would have done it any differently if I had a similar bet again. It took a long time, all the way into 2020 before the two companies broke even. That is the reason why my returns on the two companies are not that impressive. I entered at the top instead of the people who entered at the bottom of March 2020. I have been more lucky with other companies, but these two are more of a learning mistake for me. 

Global Atomic is a company I came a bit late to the party on, but managed to get in my positions in tranches at CAD 0.55, 0.57 and lastly at 1.05. They were not really on my radar, but the Twitter community were talking about them so much that I had to give it another look. I am very happy with having a 13.5% position in them now.

People might think that I had a bigger position in Bannerman with all my praise of their management and CEO Brandon Munro. The thing is that I did not begin positioning in the company before August 2020, and the Etango-8 study. At that time all of my capital was already employed, and I had to use my monthly salary payments to get a position. With them being 5% of my portfolio I wish I had more, but at least I have a lot more than the ETFs. If the market goes the way I believe it can, they will become a much bigger part of the portfolio after $75 spot price. I might also still add to the position going forward.

The companies I have with low returns are either bought at a (then) top like UUUU and URG, or they are recent purchases. I have been buying monthly the last two years with between 25 to 50% of my after tax salary. With days like this Friday with several companies up over 10%, some of the companies are getting more expensive, and therefore less attractive. If the market does not really fly away I will still add to my positions in the months going forward.

Conclusion

One can criticize my portfolio for having too high weighting of US companies, but my Section 232 positioning is a big part of this. Other than that, enCore has with their outperformance increased the US weighting. One can say I am too diversified, or that I am not diversified enough. You can also say I have too few Australian names, or my weighting towards the Athabasca Basin is too low. One thing I am very aware of is that I should increase my cash position. In March 2020 I was not able to take advantage of the fire sale going on with being fully invested. I had to wait until April to get a small position in. (If I had been able to buy around the absolute bottom is another question. I remember shaking a bit in my pants when I saw my portfolio at the time). 

You can also say I am missing some key companies. PDN, FSY, UEX, WSTRF and PEN are the most popular ones. They might be a part of the future for the portfolio. I will say that several of the  companies have very high risk and I am comfortable with that positioning.

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