Hedge funds snap up uranium in bet on green energy shift
After years of stagnant prices, a 37 per cent rally in prices for nuclear fuel uranium has helped attract investors back to the sector.
Funds such as Ben Melkman’s New York-based Light Sky Macro, Anchorage Capital and Tribeca Investment Partners have been positive on the outlook for the raw material, as a global energy crunch highlights the role of nuclear power in a transition away from fossil fuels.
The price of raw uranium, known as yellowcake, rose to its highest level since 2012 at $50 a pound last month. The move has attracted new investors into the market for the first time since before the financial crisis, when buying by investors drove the price from $20 a pound to a record high of $136 a pound in June 2007.
“We’ve been patiently waiting for something to happen for a long time,” said Ben Cleary, of Tribeca Investment Partners in Singapore, whose fund is up 345 per cent net of fees this year. “Clearly there’s speculative money coming back into the sector, there were massive price moves in September.”
The rapid rise in natural gas and coal prices to fresh highs this month has exacerbated an energy crisis in Europe and China, and has “placed uranium back in the spotlight”, said Rob Crayfourd at CQS New City Investment Managers.
“The political fallout of this energy crisis will be a greater willingness in the west to extend the life of the existing reactor fleet,” he said. “It has focused governments on the benefits of secure supply of energy from the nuclear fleet. We expect that to lend support [to prices].”
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