Matt Geiger: A Long Term View is Needed for Uranium
Matt is mixed about where we are in the market cycle. We can all agree that we have been through a devastating bear market which was long and relentless. We entered a new bull market in January 2016, and we had an impressive nine months where juniors of all types saw significant share prices increases. 2017 felt like a continuation of the new bull market, but 2018 felt very much like the bear market was back.
Are we in a new bear market or has a bull market started again? It seems the jury is still out. So far in 2019, there have been some performance from the commodity metals. His fund is doing well so far this year but the next 90 days will determine if we are in a bull market.
He believes that the world at large is undervaluing our finite resources. Over the coming decades, this should be a brilliant place to be.
He feels that the Commerce Departments Section 232 investigation into uranium should arrive on Trump’s desk by April 14th. They will provide Trump with a recommendation on whether the U.S. should impose tariffs or quotas on uranium. Currently, the U.S. supplies only two percent of its domestic reactor uranium demand.
Tariffs should have a minimal effect on energy prices as uranium is a fractional component of the all in costs of operating a reactor. A tariff seems more likely under Trump, but a quota would be the best case scenario. We should see utilities both domestic and foreign come back for contracts once Trump makes his decision.
You can find Matt’s latest Investment Letters at: http://mjgcapital.com
Time Stamp References:
0:45 – Where we are in the resource space.
2:45 – 2018 was a disaster for mining investors.
4:30 – Base metal performance
6:30 – World is undervaluing our resources.
9:00 – The entire world needs raw materials.
11:30 – Uranium report is due out soon.
13:40 – Tariffs on uranium should not affect electricity prices.
15:30 – Trump can take political advantage on uranium.
18:00 – Resource space is about people over projects.
21:00 – Why management matters.
Talking Points From This Week’s Episode
• Matt thinks the next few months will determine the market cycle.
• Trump can use the Section 232 investigation to his advantage.
• Look for high-quality people instead of just projects.
• Use the long-term cyclicality of metals to your advantage
• Avoid companies that dilute their shares.
Mr. Geiger is Managing Partner at MJG Capital which is a limited partnership specializing in long-term natural resource investments. They adhere to bottom-up security analysis and maintain a long-only portfolio of resource equities. The partnership adheres to a bottom-up security analysis within the context of four ongoing macroeconomic themes: global food scarcity, global fuel/energy scarcity, regional water scarcity, and the emerging world’s infrastructure build out. Their holdings include explorers, developer, and producers of energy, industrial, precious and agricultural minerals and metals.