Musings on Investing

Popular Delusions

Altus Strategies (ALTS)

Telling those in a drunken orgy about STDs and hangover is a thankless job. If they listen to you, they will only remember the fun they will have missed out on—and the way they operate they will eventually get STDs/hangover anyway. If they don’t listen to you, they will still have rationalizations in the future why they were correct except that in their views a few “minor” things went differently. However, if they turn out to be correct, they will tell you ad nauseam about your flaws.

Replace “STD/hangover” with “losing money,” and “drunken orgy” with “uranium mining investment”, and the above would provide a good glimpse of the feedback I got on my last musings. Only one provided me data in rebuttal, which was this graph:

If you dig into the past presentations of companies this graph is sourced from you can see exactly the same graph going back many years with dates changed.

“Deficit” and “surplus” are mostly unnatural terms when it comes to commodities, for the prices change continuously to take care of any evolving deficit or surplus.

And who knows better about the future than those who need uranium and must plan for it?

If uranium electricity generating plants were really expecting a deficit of uranium (which is a small cost compared to the cost of capital), they would have been aggressively bidding for future contracts of uranium, as a result of which the price today would have automatically taken care of what would otherwise have been deficit in the future.

An outsider who thinks he knows better about the future of uranium is fooling himself. For me, the current price of US$23.50/lb is the best predictor of the future of uranium. Any mine that does not make money at this price has no value in my view.

I have indeed short-sold certain uranium-mining stocks to profit from the current euphoria among uranium mining investors.

On investments…

I am not a big fan of Africa, but when I can find an investment whose price is discounted for associated risks, I am happy to take a plunge:

Altus Strategies (ALTS; C$0.11) has recently been listed in Canada. They are a generative company and have built a wide portfolio of properties in Africa. ALTS recently did a financing at C$0.15. It also trades in London, where it is currently trading at a 20% higher price. I have been a shareholder for a long time and am happy to buy more at C$0.11.

Warm regards,

Jayant Bhandari


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