(B)(N) CCO Cameco Corporation

Drama. The Cameco Corporation mines uranium ore in the rocks and swamps of northern Saskatchewan, Canada, and is said to have produced about 20% of all the uranium that has ever been produced, and still holds about 10% of the world’s reserves, but less than Australia (30%) and Kazakhstan (12%). However, uranium is not a scarce resource and currently retails for about $50 a pound and a viable mine can produce it for about $20 a pound, which is comparable to many kinds of cheese.

Were it not for risk price (we are buying and holding the stock only if the Red Line Stock Price (SP) is above the Black Line Risk Price (SF), and for no other reason; please see Exhibit 1 and 2 below), we wouldn’t know how to invest in these companies (Reuters, May 1, 2013, Cameco profit plunges 93 percent on weaker uranium sales); for example, the extraordinary plunge in Cameco’s profit did not affect the stock price by more than minus (2%) today and the volume of trading was about 1 million shares which is comparable to every day.

On the other hand, the earthquake and tsunami that struck Japan in March 2011 and crippled the Fukushima atomic power plant, and the aftermath of Chernobyl and many other nuclear accidents of varying severity outside of engineering expectations, has caused many countries to reduce their dependence on nuclear power despite a desperate energy gap – and the market response to the Fukushima disaster was immediate, and appears to have been a  “tipping” point with lasting consequences.

Exhibit 1: (B)(N) CCO Cameco Corporation – Risk Price Chart

(B)(N) CCO Cameco Corporation – May 2013

Cameco Corporation is engaged in the exploration and development, mining, refining, conversion and fabrication of uranium for sale for generating electricity in nuclear power reactors.

(Please Click on the Chart to make it larger if required.)

Some investors were still buying Cameco at $40 in early 2011, vigorously up from $25 less than six months previous, and absent a stop/loss or “collar”, were still holding it at $25 again a month later. The Risk Price (SF) is our best estimate of the “price of risk” for the stock and is well-formed, or defined, by a Nash Equilibrium obtained between “risk seeking” investors and “risk averse” investors (please our description of it in the recent Post, Bystanders & Collateral Damage, April 2013).

Exhibit 2: (B)(N) UUU Uranium One Incorporated – Risk Price Chart

(B)(N) UUU Uranium One Incorporated – May 2013

Uranium One Incorporated is a Canadian-based company and is one of the world’s largest publicly traded uranium producers.

(Please Click on the Chart to make it larger if required.)

The Company has a globally diversified portfolio of assets located in Kazakhstan, the United States, and Australia and is operator of the Mkuju River Project in Tanzania. Uranium One’s major shareholder (51%), JSC Atomredmetzoloto (ARMZ), is a wholly owned subsidiary of Rosatom, the Russian State Corporation for Nuclear Energy, and it recently acquired the rest of Uranium One for $2.86 a share or $1.3 billion (CNW, January 14, 2013, Uranium One Enters into Definitive Agreement with ARMZ for Going Private Transaction for CDN$2.86 per Share in Cash).

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.