The Silver Bear Cafe

As uranium ore trades at records highs, several hedge fund managers are expanding their allocations to uranium stocks, with a conviction that an increasing embrace of nuclear energy as part of a "green" future -- along with geopolitically-rooted ambitions to reduce dependence on Russian oil and gas -- means the trend has a lot of room to run.

A dozen years after the disaster at Japan's Fukashima reactor put nuclear energy on worldwide probation -- and in, Germany, gave it a death sentence -- various factors are combining to bring it back into the acceptable realm of energy solutions.

First, the International Energy Agency says that, in order to meet "net zero" goals -- which describes a state where carbon emitted into the atmosphere matches the amount removed from it -- global nuclear generation capacity must double from 2020 levels by 2050.

In addition to nuclear energy coming to the fore as a zero-carbon-emitting power source, it's also seen as a way for the western economies to reduce their need for Russian oil and gas. The fact that Russia currently accounts for about 8% of the world's uranium reserves underscores the need to develop new supply sources. There's also an increasing appetite for nuclear power in Asia and Africa.

Taken together, the uranium-friendly trends could power significant gains in the sector. "[Uranium] equities could see dramatic upside -- 50%, 100%, possibly more," Terra Capital’s Matthew Langsford told Bloomberg in a report published Sunday.

Langsford has been building positions in Denison Mines Corp and NexGen Energy. Headquartered in Vancouver, BC, NexGen is exploring a new Canadian mine thought capable of producing a quarter of the world's supply. If so, NexGen would be “very important for the nuclear industry in the 2030s, which could end up being the golden age of nuclear power,” said Langsford.

“We’re most focused on uranium miners in public markets,” Arthur Hyde, a portfolio manager at Segra Capital, told Bloomberg. “For the supply and demand of this market to balance, we need new assets to come online...If you’re going to insulate the US, Europe and Canada from the global fuel cycle, which is heavily dependent on Russia and China, the best way to do that is to build new mines, new conversion capacity, new enrichment capacity.”

That's not to say everyone's exclusively playing the long side. Hyde, for one, told Bloomberg he's thinking of shorting Cameco Corp after a 70% surge in 2023. Meanwhile, he's bullish on Ur-Energy and Energy Fuels Inc.

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