A highly successful hedge fund is betting that the pullback in NexGen Energy's stock price will be short-lived, as the growing attractiveness of the industry puts this start-up company in a potentially advantageous position for acquisition. In 2023, the company's overall sales volume was 18,000 kiloliters, a year-on-year increase of +28.10%, indicating significant growth. With regard to product structure, the operating income for products with a value of 10-30 billion yuan respectively was 401/1288/60 million yuan.
According to financial news app Wisenews, a highly successful hedge fund is betting that the pullback in uranium producer NexGen Energy's (NXE.US) stock price will be short-lived, as the growing attractiveness of the industry puts this start-up in a potentially advantageous position for acquisition.
Data compiled by research firm Zenith Investment Partners shows that L1 Capital's flagship long-short fund, based in Melbourne, has risen 20% annually since its inception, making it one of the best-performing investment strategies in Australia over the past 10 years. Although NexGen's stock price performed poorly this year after soaring 53% in 2023, Amar Naik, head of research at L1 Capital, says he has no intention of reducing his position in the company.
Naik said in an interview, "This is a strategic asset, and once it is finally approved, it is highly likely to become an ideal acquisition target for one of the larger companies."
It is understood that acquisition activity in the uranium industry has already begun to surface. Earlier, Paladin Energy Ltd. proposed to acquire Canadian mining company Fission Uranium Corp. for CAD 1.14 billion (USD 833 million).
Founded by Raphael Lamm and Mark Landau in 2007, L1 Capital started out as a long-only stock fund and launched its long-short fund in 2014. The fund currently has assets under management of approximately AUD 4.6 billion. Recently, the company's Catalyst Fund has been successful with its positive strategy, gaining praise. Currently, all the funds managed by the company have assets under management of approximately AUD 7.5 billion.
After first investing in NexGen in early 2021, L1 became the company's largest shareholder. Naik said the fund's uranium stock position has withstood recent fluctuations, while its copper-related position has been reduced somewhat. NexGen's stock, listed in Canada, has risen 0.7% this year.
As climate change intensifies, governments around the world are once again attracted to the stable, carbon-free electricity generated by nuclear power plants, and interest in uranium deposits is increasing. China is rapidly deploying nuclear power, Japan hopes to boost its economy by giving nuclear energy another chance, and in the United States and its allies, owners of idle uranium mines are restarting operations.
The soaring price of uranium proves the scale and speed of this shift to nuclear power. In the past five years, the price of this metal has risen 233%, more than three times the increase in gold and copper, even after a slight decline in 2024.
"If we look at the 2030s, there will be a huge supply-demand gap," Naik said. 'All major miners view copper as green energy, which is good business for us,' but 'uranium is likely to be next.' Naik said the outlook for uranium supply and demand is optimistic, given that there has been little investment in uranium production since the Fukushima nuclear disaster.
"Given that there has been little investment in uranium production since the Fukushima nuclear disaster, if we look at the 2030s, there will be a huge supply-demand gap," Naik said. "All major miners view copper as a green energy source, which is good business for us, but uranium is likely to be next."