Thread by @TennisonEddie

1/ A #Uranium Primer for Dummies.

There are multiple levels of risk in the uranium sector.

Category 1.....Low Risk:

Only two names. $SPUT and $YCA.L (YLLXF in the US). Fwiw, I'm not sure Yellowcake is safe from the onerous US PFIC tax rules. Do your own DD on that. I own SPUT

2/ $SPUT (in my opinion) has the best downside risk profile of any u name. Safest name to own with leverage, too. Spot uranium is not going to start trending down unless somebody drops a nuke or a power plant melts down. Period.End of story.

3/ #Uranium risk level 2: Producers and the best of the pure plays on enrichment and SMR tech.

These would include (just my opinion) $CCJ, $URG, $UUUU, $LEU, $SMR.

$KAP is another but it has geopolitical risk that the others do not have (or have to much lower degree).

4/ Category 3....near term producers and excellent brownfield companies, especially US names that stand to profit from a pivot back to domestic production.

Lines are a little blurred between Category 2 and Category 3. I put $UUUU in Category 2 but technically it is brownfield.

5/ My Category 3 names would include (not an exhaustive list here) $UEC, $NXE, $GLO, and $EU. There are some other companies in this category. Do you own DD.

6/ Category 4.....Companies with lots of pounds in the ground that are not near term producers but likely to be bought by bigger fish. Once again, the lines are blurred (some would put NXE here. Technically it belongs here but for certain good reasons I call it Category 3).

7/ Category 4 names are quite numerous. Some good examples would be $FIND, $BMN, $GXU, $AEC. Could some Category 4 names become near term producers? Yes, but they are more likely to be bought in the coming squeeze...yes there is one coming, sooner or later.

8/ Category 5....Explorers. Companies that explore for uranium...many of these companies are sitting on results from prior cycles and have good prospects already archived. There are a number of these companies but the only one I own now is $CVVUF. Others, $AAZ, $PTU, $ISO, $SYH

9/ Some people will argue their pet stock should be in some other category than what I laid out. I'm trying to show how these names should have their risk managed. The main criteria I have is how violations the names are
Category 1 is lowest volatility....Category 5 is highest.

10/ The big takeaway I want to give you here, especially if you're a newbie...is that in a down-trending phase in #uranium equites, you can burn up a whole lot of money in Category 3, 4, and 5 stocks. The idea that you can buy these and hold them and not worry...is bullshit.

11/ The safest #uranium investors own ONLY Category 1.

The smartest #uranium investors own Category 1, 2 and 3 and maybe a small smattering of 4...and they probably know how to hedge with options.

12/ The rest of us dummies, including myself, can try to hedge by overweighting Category 1 and 2 and trying to trade in and out of 3, 4, and 5 by identifying and taking advantage when the sector is trending positive, and selling when trends reverse.

13/ Before...before the really cool Category 5 name you just bought gives back 30, 40 ,or even 50%. At 50% it takes a 100% gain to get back to even. It can happen really, really fast too.

14/ There are professional folks on Utwit that have forgotten more about #uranium and mining than I'll ever know. And..there are traders in the sector that know far more than I know about both trading and hedging. My point here is just to make you begin to evaluate the risks.

15/ Because in my view, that is what is lacking in the discussion on Utwit. There are people who are ALWAYS bullish and some who lean bearish. But the people who will win in this cycle are the ones who do the best job of controlling their risks and not losing their shirts. jmho