Thread by @JekyllCapital

My tweet regarding the $EU last night clearly rubbed some people the wrong way. While not entirely unexpected, I thought I would explain our motivations for tweeting on the topic and clarify a few points. A long thread:

https://twitter.com/JekyllCapital/status/1347364486336884736

As I noted in several responses to my initial Encore tweet, the goal was not to attack management. While we do not have much of a relationship with Bill, we like and respect Paul and have known him for years.

The purpose of the tweet was to call out some of the overly promotional twitter accounts which were clearly pumping an illiquid, low float stock into retail hands at valuations that (to us) were absurd relative to other names in the sector.

Encore is not the only name like this, and we could have chosen others. At the time of my initial tweet, it seemed the most egregious.

Why tweet anything negative at all? Don’t you run a Uranium fund, why be critical? Anyone who has followed uranium and nuclear power for any length of time knows the ups and downs this industry has gone through.

Over the past half decade, investors have been incredibly skeptical of the story and generally unwilling to commit capital (we witnessed this first hand marketing a dedicated hedge fund).

While much of this skepticism has been driven by a commodity bear market, the sector has also been plagued by many of the issues found across junior mining – promotional companies, dilution, ill timed M&A, and a general lack of protection for minority shareholders.

Now that the cycle seems to be turning, why not be a perma-bull? Spouting 10000x returns with rocket ship emoji’s and an acutely selective memory? As a fund with a long term commitment to the sector, we believe short term overly promotional claims actually hurt the industry.

If someone buys a high flyer with few fundamental underpinnings and loses money, its difficult to think they won’t blame the groups who initially outlined the macro opportunity.

When institutional capital approaches the space and sees irrational movements among certain names, will it make them skeptical of the broader thesis? We think so.

It is our belief that by pointing out not just undervalued stories, but overvalued ones – we will actually gain trust and credibility.

Anonymous accounts with uranium in the title who claim to be industry experts can simply move onto the next trade when a name they pump craters.

At the end of the cycle (which we believe will be far in the future), they’ll move from UranTwit to another sector and find another low float, low liquidity, opaque name to push. We don’t have that luxury – nor would we take that approach on moral grounds.

As a firm our approach to this platform has been to add value where we can by reacting to market events, clarifying factual inaccuracies stated on twitter and generally outlining our views. We focus on the macro and advocate for nuclear power – something we believe strongly in.

I created a separate personal account because many attributed most of my @segraU3O8 commentary to Adam (who frankly has better things to do most days than even check twitter).

I’d also like to address last night’s $EU tweet. After my initial criticism of the stock’s relative valuation, I was bombarded with comments regarding the company’s “share structure” page which listed, among others @SachemCove.

Most stated something like “if it’s good enough for @FootnotesFirst, its good enough for me.” While Mike does not comment publicly on his book, I did not believe he was or had ever been a significant shareholder of Encore.

The webpage was odd – typically if we are listed as a key shareholder, the company has asked us for our blessing or taken data from a public filing (see $PDN presentation for an example). These pages would typically list either a percentage owned or share count with a date.

It was strange to just list fund names with no other information. Further, both the website and presentation were clearly using these investors as a sales point – this is fine if accurate and blessed by the investor but the vagueness of its presentation seemed off to me.

If I am correct, this would put management in the overly promotional camp from my end. When the website was updated, given the number of comments I received, I felt the need to share it.

I am highly confident in my views here but to the extent you have questions on this topic – I would encourage you to reach out to management and ask for the facts or data behind their website and presentations.

A final housekeeping item – you’ll likely see us use the “block” function more. We put out a lot of well researched thoughts and no one is entitled to our views or work product.

To the extent you disagree with us, a healthy debate is always welcome (as those who know us or have reached out directly will know). However, accounts who make personal attacks under the cover of anonymity will not be tolerated. Best of luck out there.

#uranium