Mike Alkin - Talking Uranium

Ladies and gentlemen, welcome to the business brew. I am your host Bill Brewster. This episode features Mike alkin of sakem Cove partners. Sakem is SACHEM, Cove is COVEI

first found Mike when he was doing a, a podcast in, I think I found him late 2018, early 2019 and he was laying out the uranium thesis and he was doing, I don't know if it was weekly, it felt like weekly, but it was certainly regular. He was interviewing all the junior miners. He was talking to anybody that he could and laying his investment out in public. And I see the trade is, is getting a little bit more momentum. We just had the news from Microsoft and Three Mile Island

and I always kind of said to myself, I was going to do a uranium episode. I'd want to do it with Mike because he was the guy, along with this guy on Twitter, John Quakes, that were the two that were early and kind of helped me see what they were seeing. I didn't get deep enough to really see it, but I appreciated what Mike was doing by laying his work out in public and found it inspiring. So he followed me on Twitter and I was like, is this really Mike Alkin? He said yes.

I said, dude, I'd love to have you on the pod. He said yes, this is the product. I hope you all enjoy it. As always, nothing in this

program is financial advice. Everything is for entertainment purposes and education, Not just entertainment, entertainment and educational purposes. Please consult your financial advisor before making investment decisions and do your own due diligence. I hope you enjoy the episode. Before this music drops, I do want to give a shout out to my editing team at Speech Docs. You can find them on Twitter at Speech and Docs's docs. Dax and his team is are

fantastic. All I can say is that Dax and his team offer incredibly good value and I very much appreciate what they do on the back end of the show. So if you are somebody who is thinking about starting a podcast, please consider Dax and his team at Speech Docs. That's SPEECHDOCS. All right, ladies and gentlemen,

I am truly excited to be joined by Mike Alkin goes by Footnotes first on Twitter. And I would say that Mike put out one of the podcast products that had me the most interested in podcasting. And Mike, you can get into what it was like when you started, but you are the person that I associate the uranium idea with. I remember listening to you in 2019 talking about how you were going to industry conferences and there was no one in the room.

You were interviewing CE OS on your podcast before it was a popular topic. And that you and this guy, John Quakes, who I have never met in real life, but he is on Twitter. You're the two that, as the uranium trade is ripped, I have rooted for both of you to make money on it, and I hope that's what ended up happening because you deserve it. Well, thank you. Thanks Bill. It's great to be here. Yeah, that was feels like a long

time ago. We started Sage and Cove Partners, which is the investment vehicle that we that we have to express the view in uranium and that was back in 2018 I think it was and back in 2016 and 17 I started studying nuclear power and uranium because the commodity was down 90% after Fukushima were in March of 2011. So by 2016, the commodity came down 90%, the number of companies had declined by 90%. The equities were down by about

that much. So it was very, very, those were hunting grounds where there was no one, no one really there. And it's, it's in markets like that where you can sometimes find a an opinion or you can form a view that is different than consensus. And so that's what I was doing. Yeah, I was. And to kind of share the view, I was doing a podcast and I was talking a lot about uranium and there were not a lot of people doing it at the time.

There was no one doing it. And and I remember listening to you and thinking like this guy is all in on this idea in a in a positive way. And you were just talking about how in your career you had never seen something so asymmetric and just the idea of of going into an area that there's absolutely no one. There was no interest at the time. It was. It was really fun to listen to you put that product out.

Well, thanks. It's hard as an investor, it's hard to find things where there it's not properly priced in in the market, but there are pockets of that, right. So you're trying to generate alpha, you're trying to a benchmark, if you will. And and more often than not, quite more often than not, prices reflect what what is. So the way like we typically I like to find things is look where others aren't and that's what uranium presented at the time. Did you go through a period

where you had to ask yourself, am I the crazy person? Because I I see opportunity here and no one is listening. It's a really good question, Bill. So the hard part about looking at markets that are left for dead people, you will use the term contrarian is you are running into the fire, right? So right off the bat, you're probably going against consensus. But when you're trying to form a view, you start to do your own

analysis. And that's one of the things that human psychology comes into play when you're looking at markets that are that are have been so beaten up is recency biases creep in and permeate all corners of the market. It could be the buyers, the sellers, the commentators, the forecasters. And when you come into a market without any of that baggage, but you understand the basics of how to analyze companies and industries and understand the

drivers of supply and demand. There's somewhat of a playbook to to doing that on both sides, both supply and demand side. So when you come into a market, a disadvantage, it could actually be an advantage. A disadvantage might be I, I didn't know anything about nuclear power other than what the average observer might have known and probably less. I certainly didn't know the uranium market.

I So I came in without any biases and I came in and I said, let me just let the numbers and my conversations with people who understand this guide me. But to do that, I, I had to do the numbers and I had to understand supply and demand. I didn't want to take an investment bank's model at first because you need to understand where they are. But I said, let me build this from the bottoms up.

Let me let me understand all the operating minds in the world and what the supply situation is, what the costs are. Let me understand the nuclear reactors, how many countries do it? What's the demand outlook? Because the narrative at the time was nuclear is dying and it's going away. And after Fukushima in March of 11, nobody wants it. And that's why these things are priced the way they are, the commodities and service

companies. So I but if you just take that at face value, you'll never find anything that might be a hidden gem, if you will, or hiding in plain sight. So coming to this market, I did that, I spent a good almost couple of years doing supply demand on my own. There's 430 reactors around the world and understanding the country where they operate, the attitude towards nuclear, understanding the math involved, right. Often as investors, you look for heuristics.

What? Well, how many reactors are there? How many pounds per reactor would there be? Right? You're looking for rules of thumb. And as you start peeling the onion back, I realized that rules of thumb don't apply here because the amount of uranium needed for the reactor fleet around the world is not always the same. It depends upon enrichment capacity without. We won't go down that rabbit hole, but there's a whole other segment you need to to learn.

And so as I was doing that and I would go to these conferences and I would talk to nuclear fuel buyers, people who buy this stuff. And it was hard for me at first to really understand what I was dealing with because as, as somebody at that time having over well over 20 years of experience as a hedge fund investor, it was very, I've talked to people in all industries that were on all

sides of the equation. But the people buying it, typically we're curious as to what we were thinking as, as a, when we were questioning them. If we were talking to a, to a buyer at a company that was buying a product, they would say, what are you as an investor hearing? What are you hearing from the other side? What are my competitors saying? What are you hearing about inventories? And they were inquisitive.

That was not this cohort. As I started speaking to nuclear fuel buyers, I, I was met with a, an enormous wall put in front of me telling me I'm an outsider. I'm not a nuclear engineer. I don't know what I'm doing. I should basically stay away and, and they've got it.

And I thought it was that, that attitude that just said to me, something's not right here because the numbers I'm coming up with, whether I'm looking at inventories or the amount of the cost of the supply or the actual demand. And for context, at the time the price of uranium was 17/18/19 dollars a pound and it would say what it was trading for in the market. And as I did the analysis, I realized that the average cost was somewhere in the mid 50s.

And I'm not that sharpest tool in the shed, but I know that if something cost you mid 50s to make, you can't sell it for 17 for very long. So it was then and I had to peel back the onion saying well, why are they producing it at that price? And you start to understand that there was a that the uranium market is 1 driven mostly by

long term contracts. You know, well, well north of 80% on average will trade in a long term window with contracts that cover 57101215 years depending on the, the, the contract. But that's where most of the pounds trade. So after the Fukushima event, a lot of these uranium producers, when the spot market had declined precipitously, we're still selling into much higher

prices. So my my understanding of that, when I was talking to fuel buyers at these nuclear conferences, they were telling me that the price of uranium was 17 and 18. It was going to 10, it was going to five. There was all this uranium out there. And that's not what my math was showing me. What my math was showing me was that the model was that the long term contracts that had been signed before Fukushima melted down in 2011, we're going to start to expire and rather rapidly.

And uranium producers could not sell $17.00 uranium when it caught $1820 uranium when it cost him 2 1/2 times that, that at some point production would have to start to shut down. And so you ask, do you think you're crazy? Yes, because as I'm talking to people who are obviously very sharp, they're nuclear engineers. It's but it's understanding as as you realize as an investor, you have to understand incentives and you have to understand market structure, right?

And Charlie Munger would always say, you know, show me the incentive, I'll show you the outcome. Well, it was as I was starting to go and talk to these folks and realizing a couple of things. Number one is they had no interest in what I was learning on my journey. And even though I'm not a nuclear engineer, I'm still somebody who's a market participant and I'm still somebody that.

And, and while I don't speak their language, I certainly is sitting in a, at a, at a dinner table or a lunch table or at a bar having a beer with them. I certainly could hold my own in supply demand conversation. And as I would talk about what I was learning and uncovering, I was shot down at every step. And I thought, wow, that's interesting because I'm seeing a recency bias. What is now will always be. And so they were, they were kind of latched on to that.

And as I started peeling that, why I'm thinking, why is this? I've been doing this a very long time. And over the years I've had many, I've been wrong many times. I've been right more often than not. But you're wrong and you're trying to understand where you've been wrong. And I was thinking, what is it? Why are they so uninterested in hearing what an outsider's view is?

And as I started to explore that more, you start to understand the makeup and the cost structure of a nuclear reactor, which I've known. But it really started to come into clear vision for me was the fuel. That uranium is just one part of the fuel cycle that goes in. You have uranium, you have they convert uranium from a powder into a gas. It then gets enriched. It then gets fabricated into pellets. That takes 18 to 24 months to do this stuff.

So there's many different, there's many different stages of the fuel cycle. And as I was starting to, to think about what is it, what, what are the cost of that and the cost of that, that entire, all those stages are probably around 20 to 25%. And then what's the cost of the uranium of that? And then that depends on the price, but it could be mid single digits, high single

digits, somewhere around that. And so I, it was then then as you start talking to them about that, you realize it's not a meaningful cost. Let's for comparative purposes, if I'm running a gas natural gas power plant or a coal power plant, my feedstock, the cat, the gas natural gas in the coal are 80 to 90% of the cost of operating it Here. The uranium is single digits cost of operating it.

So what I what I started to the vision that started to come to me was uninterested market participants. They're in the market very infrequently. Why are they uninterested? Because the cost is de minimis, not to say it's meaningless, but it's de minimis. And then as I started to explore and ask questions at why are you not as concerned about this? I was obviously met with a wall.

But what started to come to me was, and I asked flat out at a particular dinner at a world nuclear conferences, if you had, I asked one actually their floor fuel buyers at at a dinner. I said if I were to, if you all had a really enterprising fuel buyer that did the supply demand work and said, you know what, I think consensus is wrong here. We are 17, eighteen, $20 a pound. We should be buying uranium because the forecast going out of the future are for deficits

to be forming. Let me ask you a question. Do you all, if the price were to go parabolic and you had all these great cost savings for your plant, do you participate that in any way, shape or form? Are you rewarded financially? Are you rewarded with a, a promotion? The answer was I got laughed at was what are you talking about?

We're paid to secure fuel. So there is no these were buyers and and as you come to a market as an investor, you think buyers are traders, They're commercial creatures. These aren't, these are really smart nuclear engineers that happen to buy a product that happens to not be a major cost component that happens to be in, there's infrequent price discovery on their part. And so it's a lesson in understanding incentives and market structure.

And as I started to do that, I kept being told how wrong I was by them. So back to your question that I think I was crazy earlier in my career, I would have probably thought I was crazy. I was surprised, but I've learned over the years that narrative Dr. stories, but you can outrun the numbers. You never want to build a modeling and stick your head in a model and just believe your model because that's how you get run over, right? Garbage in, garbage out. But this, it could be garbage

in, garbage out. But when I look back over my career where I've had bigger, bigger wins, it's always been driven by keeping it simple, keeping keeping the math simple, understanding it and knowing I know how to do basic math. That's what this is. It's not complicated, but understanding the narrative sometimes causes people not to even bother doing that, right? So people sometimes are a lot lazier than you might think they are.

Everything that, like I said, most things are kind of priced in, but but when things are at extremes too optimistic, when things can't get worse or things can't get better, some it's somewhere in between and people, people latch on to what is. And so I, I didn't, I, I started to actually try and what became more was trying to figure out, get in their head as to what makes them realize that they're wrong. What is it that's going to cause them to, to have a moment.

And, and the way I went about doing that was studying the past, right? Because it might not rhyme, it might not be exact, but it will rhyme. And especially in these deeply cyclical industries, human behavior is human behavior. And, and I, I realized in the,

in the last cycle and studying it, which was a big cycle, which was nearly the mid 2000s where prices went from $7.00 to $137 for a pound of uranium. It was the same narrative. It was the same lackadaisical attitude. It was the same approach from the cohort that bought it. And because no one loses their job for paying a higher price, it just continued. And so one of the things that is hard for a lot of for some institutional investors to do is

to arbitrage the time. And here it was, you know, it's always hard. Everyone said, what's a catalyst? What's the catalyst? Sometimes you don't know. You don't know what the catalyst is. You just know that there's a mispricing. The price can't stay at 17, eighteen, $20. If it's cost in the mid 50s, it's got to get into the into the 70s, eighties at least at the time. That's pretty asymmetric. Could it go down a few dollars? Could it does it have to go a lot higher? Yeah.

When? Not exactly sure, but somewhere within the time frame of a year, 2 years, three years where prices need to start moving. And if I'm right, I'm going to annualize it a much greater clip than I could find a use of capital for other stuff. So that's kind of how I went about it. I was surprised not I didn't think I was crazy. I actually knew I was on to something. The more of them I spoke to, the more obstinance I was met with, the more conviction I read I

had. I continue to bring up the podcast, but it was fun to listen to you on the podcast go through that because you were laying it out in real time, right? And I remember you talking to some CE OS. I mean, you were talking to junior mining companies. You're talking to the big boys, but you're just like, the people are not listening and they're not seeing what I'm seeing. Yeah.

You know Bill and there are people over the years now who I've, you know the like the price of uranium sitting in the $80.00 range. If you're looking at a long term contract with that's market related today with floors and ceilings, a producer is going to sell to a utility with the price of 80 bucks long term price between 80 and 82 depending on which forecaster or price report. So say $81.00 a utility is going to pace probably $75.00 for a floor. I mean, yeah, floor.

So the producer, if you think about asymmetry today. Long term price 81 bucks that's a contract that kicks in in the fourth year and forward from today the producer is going to get a minimum of 75 and the ceilings that the that the utilities want right now, those are anywhere from depending on who the producer is and what not you get 125 to 135. So if you think about that, how asymmetrical that is for a producer, that's a pretty, it's quite a fascinating asymmetry.

But but today's investors will stare even if that's what all this year's your talk, they're still looking at the spot market. And so you know, in uranium there's two markets, there's a spot. And then long term and I, as I mentioned a few minutes ago, the long term market is where you know, well north of 84 N of 80% of the pounds trade. And the spot market is a market that is a market where some producers might have a few pounds that are uncontracted for and they might put it in there.

Some are sold, some producers have contracts with traders that they'll sell some pounds to on spot market pricing, but most of the pounds that trade there, but more than half of them. So if if 15 to 20% of the pounds in a given year trade in the spot market, half of those pounds are traders churning amongst themselves. Producers buy a little portion of the rest and utilities buy a very small portion. And so utilities, the end user is buying very, very, very

little in the spot market. But the spot market is where is it at the end of each day is where a price is reported on it. So at 2:45 PM, the price will come out and investors will stare at the spot price. And it's such an opaque market. There's no, it's not electronic market. You, you don't see how much volume traded. We actually buy physical uranium. So we, you get a sense for how much, many days it's, there's nothing traded. Think about that.

It's a six, seven, $8 billion physical market that nothing has traded on many days. And it could go like that for weeks, but yet the price might get reported a little. If the bid and the ask move around without a trade, the price can get reported. And at the end of the day, a price would be reported. And people say, oh, look at the uranium price. And they'll, they'll take that view and form a view of supply and demand in the market.

They'll form that view of what's happening as a proxy for the uranium story and nuclear power story. And it's absolutely absurd it it's not that. It's not an insignificance of price, but if if you're a trader, then it matters to you if you're pricing long term contracts, they're aware of of what the spot price is.

But long term contracts, again, we're the bulk of the pounds trade are driven by the economic supply that the economics of supply and demand what how many economically viable pounds are there? So that price, the long term price is reported once a month. And so the vast majority of pounds trade in a market where there's very infrequent price discovery and a lot of opaqueness.

And so where do investors turn their attention and choose to focus their time and energy on the market where value is not really created the spot market. Why? Because it gives them a a barometer, right? And and we talked about investors like opaque markets. Why you can find an advantage is that it's, it's not easy. If it's hard, less people are inclined to really go down and and dig deep. And so they will follow price, a price that is not as important as what creates value for these

producers of uranium. So it's understanding market structure and it's understanding that. And it's, again, you go back to your crazy point, when you are looking at markets like this, you just have to have the conviction if you've done the work that that yes, you can be right. And when you're asking yourself if you're crazy, which you have to do every day, in my case, it was just relying upon my conversations with people, a little bit of experience and understanding that that usually

you can't outrun good math. Yeah, I mean, so when you, when did you decide to really go all in on on the idea? I mean, when you six months into the research process, like what was it 'cause if I'm remembering correctly, I mean, you, you really leaned in and it was a career pivot for you. I mean, not, not a pivot in that you were always an investor, but you were like, this is the idea. Yeah, yeah.

Versus going from saying a generalist more focused on cyclical industries, but to this is the industry. Yeah, that was late 17, early 18 and in 16 I was was a journey, right. It was hey, I don't know this market at all. I couldn't tell you the first thing about nuclear power, but so I came at it when anything's down like I said or in in the beginning 90% like that, it's worth a look, but I came at it. But first ten years of my career, I was mostly a short seller.

I was looking at looking for companies that were economically broken or had some bad characters. So I was looking and doing that. You're doing stuff away from consensus, right? You're looking, you're doing your own research and you have to be aware of consensus and understand how it squares versus consensus. But I certainly you have to have the courage of your conviction and you have to sometimes make a bet and not sometimes, but you're making bets that are against mostly consensus.

Things are more often than not want to go up. So it was once I started to like, so I came in as a short seller if I could prove the bear case and the bear case that I could find was nucleus dying. It's too expensive, it takes too long to build. Renewables are coming, Wind and solar will eat their lunch and that's pretty much it. And I said, OK, let me do that. And it was very quickly that I went down the wind and solar right. And I didn't really hadn't known that too much other then what

everyone else is reading. And as I did that, I realized you can't replace a base load energy source with an intermittent energy source. That's not how energy transitions have occurred. And I read a lot of stuff by Vaclav Slim, who writes great stuff on the energy market and Smeal. Right. So you did I say Slim Smeal. Yeah.

And I, but I read a lot of his stuff early on and he just realized pretty easily and energy transitions occur over time, long periods of time, not in a time frame that esters or Wall Street wants them to or the City of London wants them to. And that's what I was getting the sense here. And it was not easy to prove the bulk case for wind and solar, nor was it easy to prove the bare case. And so as I started, my first quest was demand was OK. And how many countries produce nuclear power?

30 at the time I needed to understand the attitude of each of those countries towards nuclear. Was it negative? Was it neutral? Was a positive? And then by just going to the World Nuclear Association and downloading databases of, of reactors around the world, you start to put them on a spreadsheet. You start to understand the size they are, how much output there is and the country's attitude.

And I went draconian and I said, OK, if a country's neutral, let's assume they're going to want to start closing reactors, some of them. And as I did that, and it took quite a while, several months, I realized that even with the draconian approach, there was still growth in nuclear power. It wasn't dying and it was at the time 1112% of the global electricity grid. That's a big chunk.

And realizing that I get it, people want wind and solar, but just because you want it doesn't mean it's going to happen. And what I also realized was that's great. When the wind stop blowing, the sun's not shining, you need something else. So how's that going to work for the CO2 emissions when you were going to have natural gas or

coal-fired back up? And I was, so I was, I started to realize that it might, there might be some, some lengths because the, the case at the time was nuclear was dead and it wasn't dead. So as long as there was a growth side of it. And then that's when I started doing them, looking at every mine in the world, every prospective project of the world and realizing where the costs were and how far disconnected they were.

And so as I started to do that, that's throughout 2016 and then in 2017, you started to see some production cuts started to come in. And I was going to nuclear conferences at the time. And I had just had enough confidence after doing supply demand and studying the inventories that I can now have conversations with people who buy this stuff. And whereas, and I was OK to say, hey, look, I'm new, go introduce myself, walk up to them. And I'm really new at this.

I'm probably going to ask some really stupid questions, but if I could get a few minutes of your time. Yes. And I, I met someone who was at the state owned producer because auto prom who is kind enough to invite me to a dinner one evening with the number of fuel buyers. And it was those conversations with the people buying it where I said I need to do this because my math might be a little. I'm still learning some of the stuff, but I, I think I've got the supply demand situated.

And as I was starting to look at it, I said, it's not dying. I've got some and we've got a little bit of growth. The prices need to move materially higher and the sell side had disappeared. The right, the most of the banks were writing research on this fire their uranium analyst or they transitioned them to some covering something else. And I was like, this is really an abandoned industry, but it's an abandoned industry that's 1112% of the global electricity grid. How is that possible?

And but it was, and then it was during these conversations in early and mid 17 where I said, I'm right here, like this is a symmetrical risk reward. And I started, I, I wrote a research piece for myself and I started circulating it amongst some of the people I have a great deal of respect for who I worked for in the hedge fund business and who I was friends with. And I said, take when you have some time, take a look at this and tell me where I'm wrong. And some people I really respect.

And they came back to me and they said, wow, nothing about uranium. This is really interesting. And they had a host of questions And I started tracking down questions and looking for answers. And that was late 17. And a few folks came back and said, have you thought about starting a vehicle? Because this makes sense. And if if you wanted to express your view, I would express my view alongside of you.

And I had considered it. I've had times in my career where you just say I have to do this, you have to make a big bet. And that was this where I could not look around at the other part of any part of any market and say I could see this type of asymmetry. And that's when I decided to express the view doing that. And you're putting it on the line there, right? Because you're either right or you're wrong. And but that's the beauty of it. The market will tell you

eventually. And so that was it. And I don't know how many of those you see in in a career lifetime where you feel as though you just look and say, wow. And you have to be careful, right? Because still everyday, Bill, I come in assuming I'm wrong. I come in every day assuming there's someone smarter than me out there doing this. I assume every day there's someone that's found some piece of information that I was unaware of.

But you also have to you also as the as in the uranium investment as as it's grown and as the price has gone from 1718 up to the 80s at one point it hit 100 very briefly. But as that's in the spot market in the term market it continuously grow. It's it's up 20% this year. The term price while spot is backed off a bit, but again, the price I'm focused on its internal price.

But then as it becomes more populous, you start to get a bigger investor, a broadening investor base that comes into it. As that happens, you bring people into it who are bringing their own approach to investing into it. And this is you've seen a lot of the bigger hedge funds some some some hedge funds are starting to come into it and you can't will your way to a thesis to truly understand it. Yeah, I think you have to lay out the numbers yourself and do them and understand enrichment

math. I've spoken with some folks and they do very rule of thumb math on reactors. And that's a sure way to get your head handed to you in this business from a financial perspective because rules of thumb in this, you got to be more exact than that. So it's a fascinating sector. And again, it's one where it's still as, even though it has become a bit more popular, it's still a very small industry. It's still as opaque as it was as the day that I started and what, what people don't see.

And I, you mentioned footnotes first. I've gone dark since probably 2019. I'm. Yeah, well, I was looking for you and I was like, he's gone. And then when you came on, I was like, is this really you? I still have it, but I, I just kind of went dark because we're so in again, we have consensus numbers that are from industry forecasters and we're, we're clients of them. And we, we've really over the years taken issue with industry forecasts.

And what I don't do publicly is I'm not, you know, is, but we do privately is, is we advocate for our view with the industry forecasters that here's why we think we're right. And here's think about the IEA, right, how they're always changing their numbers. All these quasi government agencies are always, they're not economic creatures and they're not commercial creatures. And so we do a lot of quiet behind the scenes activism, if you will, in that regard.

And a lot of a lot of what I would see on Twitter is, is just conversations that I'm going to wind up resorting to. Let's look at the math. And I'm not going to share our math with people. So I just decided to back off there. Well, I mean, that makes sense in your position. In this particular thesis, you basically become the source and then you're giving away all your IP. It doesn't make sense. That's a fairpoint, yeah, Yeah, Agree.

But. When you were starting, it was like I said, it's just it's cool to see somebody that put it all out there in real time. And I kind of see the thesis floating around now and I just always go back to your early stuff, 'cause I'm like, that's the guy that I'm rooting for in this entire trade because he put it all on the line and it's fun, man. It's cool to watch. Are you as comfortable now that it's got some attention on it?

Or do you find yourself the kind of investor that that is more comfortable when things are more hated? That's a great, great question, a fantastic question. First of all. So I see a lot of the bigger funds will come in. And what's amazing is I've been in a hedge fund business a long time. I worked at a couple of really big hedge funds. I was a partner at one for for almost a decade.

Yet I will see many of the bigger, some bigger name hedge funds in the trade and never receive a phone call. I get phone calls from investors, from hedge fund guys or from mutual fund guys who want to ask questions.

But then you see some bigger firms come in and so I get fair amount of inflow, but I'll see a lot of stuff that you would think that if there's only a very, there's only a couple, 3, a few people that do this, you might get a phone call and just say, hey, you want to kick it around. And that is not, that doesn't happen all the time. So it doesn't happen a lot at all.

And so I their idea dinners as investment banks will hold idea dinners, I might send one of my guys or I, I will very rarely, occasionally I'll go, but not all the time. But in, in the last year, you've seen a more accelerated pace of bigger funds coming in and they have thesises that they are convinced is they're going to drive it. And then it all always reverts back to what spot pricing doing and and you know I'm not going to engage in that.

Yeah, well, that that's nice to see though, because you can say to yourself, well, people still aren't even asking the right questions. Absolutely. But I do see. So for instance, some periods where when everyone's piling in and they want to buy it, I'm like, if it's for the right reason, yes. But if it's because, you know, they think Spot's going to have a huge move, you know, like this year is a great example.

Spot is down. I don't know, high singles, low teens term pricing where that's where the magic is made is up 2122% and why? Because that's telling you that utilities and their and utilities have not contracted at the pace they did last year meaningfully below and on a lower volume, there's prices are still higher and that that's

kind of like perfect, right? It's because if volumes are down, then normally pricing is down here, volumes are down and pricing's up because there's really very little economically viable pounds. And so that will sort itself out over time. But you know, you got, for instance, a lot what we're seeing now is with data centers and AI. And just on Friday, Microsoft announced a fabulous deal there with the Constellation. They're bringing back Three Mile Island.

Think about that. Microsoft signed a 20 year power purchase agreement with the constellation of bring back three of all reactors 3 mile island, right. So why? Because they need the energy for their data centers. So this is a huge deal for both That puts the Good Housekeeping seal of approval on. It's the second deal from a from a major tech company, but it's great for nuclear and, and earlier in the year you saw a deal much earlier in the year and that kind of drove a lot of

investor interest. And I understanding the role of AI and data centers in nuclear power and uranium is important. It is fabulous for nuclear power plants. It is fabulous because it gives them a, it validates how important clean energy is, a it validates how important reliable base load energy is. And the dollars from this are fantastic for the nuclear power plant. And I think it creates a great reason to build new reactors.

But also you're seeing plants that were closed come back, Palisades, Michigan, this one coming, this one coming back. That's, that was in nobody's uranium forecast. So those are great, but you have to understand the context of that. That's overtime, right? So overtime reactors will get built. Overtime, these plants will come back online. The physical spot trader of uranium right there, 7 or 8 traders of physical uranium with not a lot of balance sheet

capability. Not that they're small entities, but the uranium trading side of it doesn't have significant balance sheets. They see an announcement, they're not going to run out today and buy uranium for that announcement because a plant is coming back online in three years. That's just not how it works. It's wonderful for the overall nuclear theme. It's wonderful for all the future uranium needs, and it is

great for all of that. But if if people pile in thinking that it's going to immediately go parabolic tomorrow, they have to understand the context. Right. And again, they're focusing on spot where you'll you'll see that really manifest itself is in the is is in long term pricing because the utilities will want to go out and secure for these plants. So it's just as I see people come in and if I see the narrative, their narrative, right? I have to be aware of their narrative.

I have to respect their narrative. I have to respect their viewpoint and it, it informs how I'm positioned. Ultimately, all the stuff is great for it, but you just have to understand who the participants are or what their expectations are of it. And in, in such an opaque industry, I, I, I can't tell you how many times I've spoken with really sophisticated investors that I talked about the difference between spot and

term. And then all of a sudden spot will have a few days down and they're calling up saying, what's wrong? What are we missing? You're not missing anything. That's not where the value is created. You're missing that it doesn't matter. Yeah, you're missing that it's, you know, but you realize that people really need something to look at every day, right? Just taking and, and again, I, I think a lot of it goes back to a lot of investors like to take

shortcuts. And I get it, they're looking at many different industries are doing different things. They use heuristics. I so I think that's where the opportunities created. Sometimes it creates some short

term noise. You just had to pull back in the uranium equities in the last few days they've been ripping, but you saw people piling into it on AI and data centers in the spring and all of a sudden uranium, the term price was going higher, but the spot price was going down a little bit and people were saying, wait a second, how does that is? So what's happening? Why is the term price? Yeah, where is the spot price going up? You're like, Oh my God, you know, like, what are you like?

OK. So that kind of informs how I want to be positioned as in terms of do I want to be fully invested at any time, Do I want to have a little bit more cash around that type of stuff? Yeah. So back back what six years ago or so, you weren't having those kind of conversations. But now, now positioning might might matter a little bit more. Exactly.

And then you get to the point where you just kind of RIP the Band-Aid off and just say, you know what, I'm, I'm ripping the Band-Aid off because the fundamentals are so good that I'm willing to withstand some more volatility. And, and, and in, in my head, we're kind of at the RIP the

Band-Aid off stage. You know where, yeah, I know you're going to take, you know, sometimes you're going to see some volatility down because maybe the spot price moves down a buck or two, whatever it be a few bucks, who knows? Or it goes up a few bucks. But but in in the stuff that I'm more and more honed in on, I just, you feel really good about it. And those are the times where you just say that's it. And eventually the others will catch up to it. But yeah, we're talking about

six years ago, the risk from the Russians. I mean, I remember giving a presentation at a conference, I think it was in Vancouver, it might have been in 2017, talking about the geopolitical risk. And one of the things that I couldn't understand as a layperson coming into this is how is it? Am I missing something or between the Russians, the Kazakhs and the Uzbeks, they said half that. The Americans buy half their uranium from them and nuclear power is 20% of the US electric

grid. Like again, I know I'm not a geopolitical expert at all. I know probably just what the average person does about it. Now I pay more attention to it the last several years because it's what I've needed to do, but I'm certainly no expert. But really like you're AUS fuel buyer and you feel in a Western or Western European fuel buyer and you really actually think that that works.

You think that if you're AUS produce, if you're AUS nuclear power plant and you look back and say in 1981 and 82 that the industry used £50 million uranium for its nuclear power fleet and it bought £44 million from America, American uranium producers. And Fast forward to 2017 and today you use roughly 50,000,000 lbs uranium and you buy and in the US produces a few 100,000 lbs. Like you think that's normal. That's just not normal.

That's not good. At some point, you run risk of something happening and that, and at the time of my 17 presentation, I called it, the US is playing checkers while Putin's playing chess in, in terms of nuclear power and uranium security. And so, you know, Russia controls 40% of the global enrichment market, 30% of the conversion market, 15% of the uranium market.

These are all part of the fuel cycle. So just looking at that, at how lackadaisical the US fuel buyers are, I could say, and not every one of them, but more, way more of them than not. So at the time, I felt those were important points to bring up and people just yawned at it. And even today, the fuel buyers, I don't, I mean, I'll see them in a conference, maybe I'll chat with them. But I, I've been there, done that.

And they were, they've been telling me I'm dead wrong since 2017. I mean, I, I went to the Nuclear Energy Institute, which is the largest trade body in the world besides the World Nuclear Association. But in the US, it represents the interests of those in the nuclear industry. It it it read the utilities and they represent them in Congress and they go lobby for them.

And back in 2018, we went to them and said the forecasts that are out there from industry forecasters, we think are not only wrong, but they're materially wrong. And it's if they're driving, looking in the rearview mirror and they said, OK, go take a walk. We don't know you. And we kept at it and I kept going to them and finally found someone there that was very willing to listen to us. And we said, look, here's our math and here's a deck and here's our math.

And it's not our own forecast. This is our analysis of the forecasts that are made. And This is why they don't make sense. And again, we're not nuclear experts. And, and I was very grateful to have somebody there take the time to listen. And they said, OK, we'll come speak at our annual conference.

You can speak to the fuel buyers. And we did in 2018 and that was I think fall of 2018 and I stood up there and said you folks have done a wonderful job. You were buying, you're not signing long term contracts after Fukushima, the price uranium was in the 70s and and then it's down in here in the high teens, low 20s. Congratulations, you didn't re up on long term deals. You bought you, you sucked some pounds out of the spot market.

That's when spot matters when there was excess supply, which there's not now said. So you guys have done a good job over the years and you're looking at industry forecasts that would suggest to you that you can still stay out of the contract market for a long time. And let me just share with you a viewpoint as to why that's different. And the numbers I'm going to present to you are not our numbers of our our outlook on the future.

It's uranium math and nuclear math as you guys know it and why it just seems like it's illogical. And we did that and I stood up there for, I don't know, 3540

minutes and I came off the the stage and someone approached me and said, how dare you come here? And I said I'm sorry. They said I you're just some bad Wall Street person who only cares about money. And these are good hard working people. Like what is wrong with you? And I, I said, like, are you serious? Like what are you out of your mind? Like, who are you? And so I said, you have a minute? And she said, why? I said, well, come over here,

Let us show. I was with Tim Shaler, who works with me. And I said, let us show you like how we come to these conclusions. Let us show you what a model looks like. And it's, you know, it's enormous, our model. And again, you don't want to get lost in your model, but that that's how we drew our conclusions. And not long into showing this person, she said, wow, I had no idea. I thought you were just some to

a bad Wall Street guy. I'm like, well, I don't even know what that means, but OK. And, but, and, and so prices moved up a little bit throughout 2018 and we kept coming back to the NEI saying prices this forecast aren't changing and they need to. And they said present again. And I did that in Nashville and 2019 and in the fall, and I was met with the same disdain. Fuel buyers would come up to me and say, you have no idea what you're talking about. I could buy all the uranium I want.

Prices are going to 15 and 10. I had one of them taunt me by saying things. It was really like they were really I was. Again, not all, they're not all like this. But I was really, really surprised and taken aback by the lack of intellectual curiosity about a someone else's view from people who are really bright. And so that I can't tell you how much conviction that has given me. And one of the things you see

now is you have expert networks as who provide hedge funds and mutual funds experts to speak to in any industry. And so if you're a hedge fund wanting to get up to speed right now on the nuclear power industry, you're going to say, hey, go get me 3 nuclear fuel buyers.

I'd like to speak to them about uranium and they're going to get on the phone and they're going to speak to then and for years that I'm sure they've been doing this, they're getting it on the phone and speak to three fuel buyers and say, yeah, there's plenty of uranium out there. And those are the same folks when the price was 17 was telling me that. And and versus here you're seeing floors and ceilings at 1:25 and 1:35. They are the gift that keep on

giving. Yet the way the structure of the research process is they're going to expert networks. They find these people and if you don't understand and have them understand the how the how the sausage is made, you're going to be misled. Not not they're not miss purposely misleading. It's just what their own beliefs are. And so it's it's it for me.

That's a beautiful thing, but I've been doing this a long time now, but almost 30 years as a professional investor and I've never seen a cohort of people who are so uninterested in hearing the other side of the story. And so far I've seen them them prices move up 4X in there against them and they still have the same attitude. Which, to your point there, it doesn't sound like they're very

incentivized to care. There's there's no incentive to very little to none incentive to care other than maybe you would think pride. I don't know. But it doesn't matter if they don't. It's just not a thing. But we actually chuckle because we if we go to if, but when we go to these conferences, I mean, you talk to them in the hallway or in a bar, it's as though you're an adversary. It's very bizarre. They don't have an incentive. They don't get it doesn't matter

what they pay. So that's the bizarre thing is they should want to hear what do they care, but they don't. I don't know that I'll ever see anything like this in my career again. And you get so few. Well, I hate to quote Buffett stuff because it is what it is, but you know, if you had a punch card, how many times would you punch that card in your lifetime? And investing? I, I don't know where I'll see

anything as asymmetric. Is this because of the information asymmetry and the inner working? It's it, I, I said, I don't know when, but it's, it's an MBA class in inefficient markets is what this is it the, the whole uranium trade is an MBA class in how how to find value where others aren't looking and then at later on the whole other aspect of why market structure and market incentives are so

critical to understand. When you say that you don't know if you'll find anything is asymmetric, are you still thinking it's that asymmetric? Are you thinking about when you first stumbled into it? That's a really good question. I, when I started this, I would have thought you'd get uranium prices up into the, I don't know, 70s somewhere and you kind of call it a day because in our modeling, I never really put

much growth in there. What I never anticipated was the demand that we're seeing now when you were listening to those

podcasts I was doing in 2019 and the 2018 when we really started out on this, the attitude from the major nuclear power producers in the world was negative. So United States the largest, it's 20% of the electricity grid in the US. At one point it was almost 30% of global nuclear power reactors were closing. Half the markets are in competitive markets and it was challenging for them fighting heavily subsidized wind and solar. So that out and the outlook was

more negative than positive. South Korea, you had just had a new president come in who ordered all reactors under construction to stop and they were wanted to reduce the reactors and they're a major producer. The French who derived 75% of their electricity from nuclear power in 2018-2019, had said they were going to go down to 50%, so they were going to reduce their dependency on nuclear. The Japanese were still reeling from what was from the Fukushima after after effects and there

were 54 reactors at the time. In March of 11 when Fukushima went down, they shut them all down and they started importing LNG. But at the time nuclear was 30% of their electricity grid. So at that, at that time, we just thought they might, they only had a couple running. You thought maybe they might not bring any back. The UK had the same attitude. It was permeating. So and, and I even want your cone in on that.

Fast forward to today, the French are not only not going to go to citizens from 75 to 50, but they're going to build like 14 new reactors, monster reactors, which is enormous. the US is seeing life extensions. the US is seeing closed reactors restart. They're got they've got production tax credits. They're getting these deals with the major tech companies like Amazon and Microsoft. It's enormous. The Koreans are back to building reactors. The Russians are building a lot

of reactors. That's not again, it's Russia, but that's going to take Eastern pounds and send them east just every the UK, everywhere you look there is a rejuvenation of nuclear interest and demand. And you know, it's not what was basically no demand to barely any, maybe not even 1% is now 4 times that amount. And then you've got which we don't even include is the small modular reactor demand.

You've got secondary demand, which is one of the things that we didn't touch on. But this industry as I mentioned, was driven by long term contracts. In periods of excess supply like occurred after Fukushima when 54 reactors went off the grid, you had a backup. The utilities would only contract at about 30, three, 3537% of their annual needs. So they would burn fuel in a reactor and then only contract for 1/3 of that roughly. And they did that last cycle too.

And they did that last cycle from like 92 to O4. They burned 3435%. And then all of a sudden when they decided to go back into the market again because they were complacent and again, because they just, it's just how they operate. They, they go to extremes and they wound up purchasing some years 120 a 130% and more of annual requirements. And so when you look at that here, you Fast forward to since Fukushima through 2022, what

were they doing? They were buying about 36 to 37% of their annual demand, replacing it with contracts. Again, they've under contracted. So there's going to be secondary demand. So we look at this new demand coming from all of these major countries that heretofore had been turning negative are now doing a 180. You've got SMR demand coming, you've got extensions coming, you've got up rates, which a lot of people don't talk about where the nuclear power plant will increase the productivity.

They spend money to increase the output of the plant and that can be very meaningful. That is not in people's numbers. And so when we look at that demand profile now, the thing we haven't seen because the utilities have been so slow to react to cover all of their future uranium needs.

And Bill, if you think about any mining that build a copper mine, to build any mine, it could take decades from discovery, from the exploration to discovery to permitting the licensing, the building and financing and all that stuff. And uranium is no different. Nuclear uranium mines take decades in many cases. And so in mining world, seven years, five years is tomorrow. And so in the case of uranium, when you look just out to 2030, we could look to 20402050, who

knows, right. A lot can happen in there. But let me just look out 6-7 years from now depending on a few different variables. But anywhere from 20 to 25% of the supply that is needed for the demand in that year 2030 doesn't yet exist in the form of a mine. So there are identified projects, they're going through the licensing and permitting phase, but they're not mines and building stuff happens all the time.

And so when you look at that, it's very, very significant as to what's out there that needs to be built. Another 5 to 8% can come from existing projects that are on care and maintenance. So you've not because it because the utilities we're still disbelieving they haven't committed enough long term pounds under contract. If we did go 2040, it's the number that's in my head.

I think the number is about 2.2 to £2.4 billion and again roughly by our math today 210, twenty £30 million per year of consumption, but there's over £2 billion it's not contracted for. So those are called uncovered requirements. So the utilities are facing a significant delivery waterfall

expiry. So all the old contracts they signed are starting to fall off a Cliff right now into a period where they need to start contracting for a demand profile they as a cohort globally did not anticipate. Normally in these cycles, you don't see demand moving that much. So they may have been slow in the last cycle. In the last cycle they were contracting at at 3435% from 92 to O four.

And then they went up to 110. Twenty, 30% of annual needs and they contracted for because inventories were down. But that demand profile then was not gangbusters. It was meh, low single digits. Now all of a sudden they've had the same complacency except there at in the last cycle.

By the way I should add when the contracting started in mass in O5, when you looked out to the future over a six year period, there was a couple £100 million of surplus in the market and when they started contracting prices went parabolic. Fast forward to today, even by the industry forecasters who we vehemently disagree with and think they're dramatically understating their real supply demand numbers just because their own analytics not for any other purpose they would they

show deficits. And so when we look at you asked, even after the price move, do I still feel I feel the asymmetry is is as good, if not better likely, but because. The demand side of the equation has moved up so much and these are once these things get in motion, they stay in motion. Once once things are in construction, they stay in construction. So yeah, it does.

It feels good. Now, that doesn't mean they're with it though, Like I said, brings more interest, brings more people who bring their own investing playbook to it. And when they're coming in and you've got big funds coming in with large amounts of capital and that they think they're looking at copper or gold. And, and again, remember, a lot of at least Western US, I'll say investors, they don't look at

commodities almost ever, right? But now they see this commodity is working and they're coming into it it and they look at it like they, they treat it like their tech data, like their data points looking at a tech company. And you know, we hear what's important to them and we just think that, you know that that's not the play. And so, so there will be some increased volatility with it.

But when I I look at the amount of uncovered requirements, those that are not contracted for, I look at the precarious nature of mine supply one here's another point Bill is 65% of all pounds of uranium produced are produced in the East and almost 70% of pounds consumed or consumed in the West. And in that, one of the things that the people have brought

with their assumptions is that Kazakhstan, they produce 41% of global uranium and they're 20% owned by the public and that was floated in 2019. The rest is owned by the state, by the sovereign wealth fund. And everyone assumes that Khazaram Prom, which is the name of the company, when they came public their pat, their cost to produce a pound of uranium was something like $14.00 per pound on an all in sustaining cost

basis. So cash cost plus other expenses to run the company and other items about 14 bucks a pound. And and you recall I said earlier, the average cost to produce is in the mid 50s. So, so the prevailing wisdom would be, well, the Kozaks are the low cost producer. They could just pound supply into the market and they're the largest producer and they're just a spigot that's always going to get turned on. And those are what all the real sharp folks who go to idea dinners, we'll talk about.

We hear that all the time and I tell the sharp folks they should go back and sharpen their pencils a little bit because if you actually did the work on Cazada Prom, what you would see is that the state owned producer in Kazakhstan does produce a lot of uranium. They also cost in tangay and they sell in dollars. And so in around 20/12/2013 time period, the tangay was in the 75 to 85 tangay to the dollar range. They devalued the currency and

let it float against the dollar. And so by the time And so when if you were to look back back then before the company was public, they had debt. And so they did have annual reports and if you were studying like we did in in 16 and 17, went back and found those. One of the things we noticed is wow producing in the high 20s and mid 30s and then all of a sudden as you start to get to the devaluation and the 10 gig goes from 75 to 8010 gig to 300 and 4010 gig.

All of a sudden you start to realize that hey, wait a second, this is really an FX play to an extent yes, they produce thing yes, produce a lot of uranium. So now you Fast forward to so, so that that could they produce? Yeah, Well, in 2017 they were the first to cut production and they said, well, we're cutting production. We don't like the prices and we we're taking a value over volume strategy, which would be a departure from Eastern philosophy, right?

The Russians just pounded out there. And so that was a departure. So they were disciplined in 18 and 19. And in Kazakhstan they produce under what's called subsoil use agreements. Those are agreements between the entity, the minor and the state as to how much you can produce and you to produce plus or minus those agreed upon numbers, 20%. And if you go on either side of that, you have to go back to the state and ask for approval.

So in 2018 they cut, 2017, they cut production 20%, 2018 20%, 2019 20%. Then COVID came along and it's been 20% below. And everyone keeps saying, well, they're going to turn the spigots on. They're going to turn the spigots on. And when they do, here comes a flood of uranium. And our view has been actually, no, no, actually the Kazakh uranium is challenged. It's a vast reserve. There's significant reserves. A lot of it was mined. They came out of nowhere in in 2000, in 2005.

If you look forward in 2015, they were supposed to go from 9,000,000 lbs of production to £21 million. By the time you got to 2015, they were producing £56 million. That's in the ballpark of what they produce today. And a lot of as most miners do, they take the good stuff first, right? And they leave the harder stuff behind. But as we've gone forward, the the reason you see a lot of this discipline, they have a hard

time getting supply. They have a lot of getting acid to do it. They're having a mere host of issues or not to mention that Russia is in their backyard and puts pressure on them as to where supply is going to go. But when they just recently gave guidance for 2025, production is down 17% versus the subsoil use agreement. And people thought that that would start to get closer.

But what you really see is the cost to produce a pound of uranium is now around going to be guided to $28.00 a pound. So when they came public, their costs were mid teens and they were if you looked at what they were projecting out by 2024-2025, they were low teens. Well they're not low teens. They're guiding to $28.00 a pound. And if you currency adjust, because the tenge has gone from 3:40 when they came public in 2019 to 480 now, that's really

like 38 bucks a pound. And so rule of thumb, heuristic investor, institutional investor. Well, the Kazakhs are their state owned producer, largest in the world. They're just going to keep sending low cost pounds. Reality of those pounds are 2 1/2 times what they thought they would cost. It's more expensive to produce. They're not producing as much.

And with these geopolitical winds, you're seeing a lot of without getting into great detail, you're seeing a lot of the influence, the Russian influence in Kazakhstan move that those pounds very likely to head east, not West and the West and, and, and some of the western utilities need it. So that's another factor that's out there that's hanging over the market. And I'm not sure that that as as odd as it may sound, I'm not sure that's fully appreciated. That's interesting. I mean.

When I think back to what you were talking about, when you've got the potential, I guess the narrative in the market was the overhang from Russia using some of their nukes to to what unenrich D enrich. How do I how do I don't know what it is, but they were basically like using surplus uranium from the nukes and there was just a lot of I mean, when I thought about it, I just said this. This would like require truly dedicating my life to getting

through the opacity here. Well, so they did, and it sounds like it's true it. Remains true. Yeah, it's a good point. The opacity is still there. As to to that nukes thing that's called a megatons to megawatts intro from after the wall fell in Berlin and Russia and USSR went away, the US was concerned that a lot of those nuclear warheads would wind up in in bad actors hands. So they had an agreement now in from 93 to 2013 to down blend a

number of 1600 nuclear reactors. Take the highly enriched uranium, which is a nuclear warhead and and down blend it to low enriched, which is what you use for reactors. 1 is 90% for bombs and the other is 3 to 5% for reactors and take that and it's a very expensive and complicated process to down blend it and then you could use it. And that was a way the Americans could pay the Russians to not be bad actor, to not send, to sell it to bad actors.

And that existed. And that created an additional £20 million of supply into the market. Now again, for context, at that time, during that time period, you were probably looking at £170 million of demand into the US. It was 50, so the US lot of incremental pounds. Exactly. And and that's gone away now. And the opportunity might exist down the road for some warheads to be used for these new advanced reactors. If there's a shortage of low enriched capacity, they might be able to to use it.

But you're talking to a miniscule amount which would be wanted for those SMRS which is a mid twenty 30s type thing down the road. So that that's a good thing from the potential for available demand, although it probably would very unlikely happen because you can't, it would be the availability. But it could it be out there, Yeah. Could it help advance SMRS? It it might be able to. We don't factor that in. It could that would be a good thing.

But yeah, so there was a lot of the SMRS use, I should say the SMRS use high, high assay enriched uranium. So it's a 20% enrichment level versus the three to 4% enrichment level. So you don't have to down blend it as much. But the SMR? How long does an SMR take to get sort of from? Conception to implementation conception a long time decade.

A while, but in terms of the features to an SMR, and I am not an expert on SMRS, but the big reactors in the West, big reactors have been a problem because they're customized. Every reactor is, even though it's a model, it's built on site and so there's variability in the construction and delays and cost overruns. It was the last big one in Georgia. Yeah, exactly. Yeah, and that thing was a mess, right? From an overrun standpoint. For years and years and years.

And immense amount of billions overruns because they're each one is custom. Well, the the SMRS are built in a factory and so it makes it standardized and you can have standardized supply chain. So interesting. Yeah. So, so that is in the future though we we put very, even though you could have that demand, we in our modeling, we put very, very, very little demand for it. So did the reason. I find it intriguing and. And this is obviously no longer

like a secret because of what Microsoft just announced. But I have been racking my brain to figure out how we can have the forecasted energy demand usage of AI and also pursue a green solution to energy. And the only answer in my head has been nuclear because I just don't I unless I guess battery storage just gets so much better but it just doesn't seem possible to me. Exactly.

Nuclear is a very elegant. Existing simple it sounds it sounds hot, but it's a simple solution right it's when you look at it on us from a safety standpoint per terawatt hour it's the safest in the world Well, you know what's wild Mike is the the. Reaction to Fukushima. And I mean, unless my research is wrong, which is it's very possible, but I don't think that there was maybe like one or two direct deaths attributable to the health consequences.

And like, didn't one person just recently die? But like the the deaths were all related to the earthquake and the tsunami, which was a tragedy. But that's not a nuclear reactor issue. That's a nature issue. Exactly. Yes, that's exactly right. And it gets, I don't want to trivialize the deaths of the people at the plant. That's terrible for them. But yeah, so when you look at it over the the the data over decades now, it is a very safe

form electricity generation. And I think the Microsoft deal of like I said earlier in the beginning of all reactors, right Three Mile Island, which has this stigma attached to it that was operator error. And here they are bring the plant pack online. So it's a really a nice ringing endorsement from a major tech company. I'll tell you as a as a person who.

Roots for capitalism. It was pretty nice to see that headline too, because it would be there would be a beautiful thing about the biggest tech companies in America solving the green energy crisis through capitalism that is now come I root for well. So it's a great .1 of the

things. That I've noticed with it's such a great point with the fuel buyers is always waiting for the government to come in in one way shape or another, always hoping on all different for all different facets versus letting the market solve it. And here I to to your point, you're seeing the market solve like this with Amazon at the Susquehanna and and then and this with the Microsoft three mile Island. I mean, the just just Constellation stock was up 20% on the news Friday.

The markets are telling them it's OK, go out and build more reactors, go out and do these are good things to happen. And so it's funny how the free market can solve for a lot of things. It will be interesting to see because that that's not how fuel buyers think. Yeah, I don't. I don't know that it's how the people in our government. Want to think either and that's why I'm really rooting for it to be to be a real not, not what bottom up solution and it would be, I'm rooting for it.

It would be awesome. So we'll see. Have you? Changed your views on the incremental power generation from renewables. Now that it's something that you followed for six years or so, I got to imagine that you're looking at a tangentially, right? I think there's a great.

Role for it and I think there's a nice growth profile to it just like similar like I think about I think about EVs right it seems people like to frame debates it's all or nothing and those are those rules of thumb right it's. It's a lot easier to live that way than to have the nuance in the conversation, like you look at platinum group metals. Palladium and platinum catalyst for catalytic converters, right? Well, the PGMS, the commodities been shot, the miners have been

shot. The people in the service, there's some people who recycle it, their stocks have been shot because EVs were going to save the day. And then, well, now EV growth has gone from, I don't know, 50, sixty, 70% down to 10%, whatever it might be. Every day you see, it seems you see a new car company or truck company saying they're going to slow down a little. So then it right. That doesn't mean EVs are not

going to be there. They'll be there maybe a slower pace and markets will adjust to that. Same thing with wind and solar. I think they're, they serve a really great purpose in certain parts of the world and I think there will be a reasonable growth rate to it. So, but again, they it's all for nothing. It seems that people think. So we haven't gone down that road from an investment standpoint. Our focus is on on that portion of it has been uranium.

But it often like there's three sides to every story, right? Your side, their side and the truth. And it's, it seems like that's the way with these industries that there's bulls and bears and the truth lies somewhere in between. Yeah, the EV thing I think is

really interesting because the. Growth has slowed or or even gone negative, but it's like, OK, well give me a large purchase consumer discretionary funded by debt asset class that has grown over the last two years like you can't find it right, right. So you know how much of. This is. Interest rates versus the more I don't know it's, it's, it's going to be interesting to look back 3-4 years and see what happened. It is. That's why we've been just

sniffing just. Trying to explore the PGM side of things it I see a lot of similarities to uranium in a sense where you've got a a market that is, you know, you've got the major producers in PGM's it's Russia and South Africa and uranium. We've got Kazakhstan as a major producer, but the Russians, it's one's one's persona non grata to the West and South Africa is very challenged state to produce in. So you got real price risk all

the time in there. You've got a technology where people just assume that the ice engine is going away of the dodo bird and so they just ready fire, aim and shoot anything associated with that. Just like you had people thought nuclear technology, nuclear power was going away of the dodo bird just six years ago. And the truth is neither is happening, right. As these EV platforms slow, well, the ICE engines are hanging in there. And so it's just finding that price where they can.

There's an economic incentive to produce and the companies can bat. So there are similarities there. And I So from that standpoint, we do sniff around the PGM space. Yeah, more cyclicals. Did did somebody hurt you when you were a child? Pretty much I. Think I'll tell you what I know the the secular stuff I find kind of boring. So and I think, you know, it's a really good point you bring up though, but I think investing you've got to do what your

personality is, right? And then what I learned early in my career was being a contrarian for the sake of being a contrarian is a way to get your head handed to you, right? It's OK to question things, but you have to, you can't just be contrarian. And so there's a lot of things that over the years you look at and you say, you know what, I could see where I might be right, but there's enough evidence proving showing that I'm not it's time to move on.

And I look for that every day in nuclear and I can't find it. What would you if you had parting advice?

To let's say younger analyst, I mean knowing what you know now and stumbling upon this trade when you did and, and not even a trade at this point like a true long term investment. What would you tell people to go out and look for and seek? I would look for industries. That are really down on their luck that we're look at the I mean I look at my world is is commodity and commodity linked equities.

But it could apply to any industry where something is down seventy 8090% where you've had a lot of fail a lot of failure. And the longer the, the longer that's existed, the, the better the chances is that human element coming in the recency biases which permeate all sides of the of the market. So that's where I would look. And if you're a young analyst, you will have access. If you're working at a fund, you'll have access to the sell side research.

I would really try and stay away from that at first because it's going to be biased. And you know, now I'm not getting into agendas and all that, but you know, if you're an analyst and you're recovering an industry that's been beaten up for seven years, are you going to be the one that's going to stick your neck out and pound the table to buy it?

Probably not. You might be, but that doesn't really happen a lot and you tend to see the follow them follow a career preservation right And that I I get that, but I well, Mike going back to the to an earlier part in our. Conversation. If they're talking to the insiders in the industry and the people inside the industry are convinced the industry is dying, you're not going to get a unique view, 100% Bill. And that's what happens.

And so when what early on, when I would start talking to uranium analysts, as I got to know that and started to form my views, I got, I was met with this, not all, but some of them say you're wasting your time. What are you doing? And so it all comes down to when you're looking at commodity linked type things. It's all 4th grade math, It's supply and demand. None of this stuff is that complicated. Uranium has some enrichment math that you got to try and figure out.

It's a little more complicated, but that may I don't know that's. You can figure it out. So it's really looking for industries that have been beaten up, where a lot of the companies have disappeared, where there's a negative bias permeating it, and then trying to take a very holistic view of supply and demand.

And it really just requires spending some time doing it, right, finding your own sources, like for a week, went to the WNA and downloaded the PRISM database and, and, and looking at all the different reactors, trying to understand it takes time. And if you're a young analyst, you have to work for a firm that is willing to give you that time, right? I often hear from younger analysts or guys will work for me, say they're talking to someone who's looking at uranium and the spot prices.

This is a good example. Spot prices down a couple of bucks and my guy will get a call from someone at one of these firms, say my boss says I got to be missing something. Somebody knows something you don't, you know, it's like, OK, well, that's not true. You might think that because but this is an oil, right? This isn't a look that even that I could make an argument, but it's not the case.

But there you just have to ignore the noise and you have to be the firm that allows you to do that right, That has has longer view cat longer term capital. If you're in this for a quick trade, you're probably, it's not the trade, it's not the investment, but it's it, it really is. Let let your own research guide your numbers and let those numbers guide your conviction. When somebody tells us something about nuclear uranium that can affect supplier demand. Well, I could plug and play it

into our model. And I really, I, I don't care what the narrative is. I understand how the math works and, and then we'll go from there. I have to respect the narrative. Like I said earlier, it helps inform maybe when I want how I want a position sometimes, but just do your own work. I worked for a really, really good hedge fund manager many years ago. I won't mention his name here, but and one of his rules was never underestimate the laziness of investors.

And right, just because you hear it doesn't mean it's so and so just say do your own work. I like it. Well, Mike, I. Appreciate you.

Coming on the program. I was reticent to dip my toe into uranium because it has bubbled up into my feet a little bit more. And whenever people kind of get on a trade, I get a little bit nervous about it. But I always told myself if Mike Alkin ever contacts me or anything and wants to come on the show, he's the guy I'm doing

it with. Or that guy, John Quakes, John, John and I have never actually chatted and, and I don't know, like I said when you popped into my I don't know if you followed me on Twitter or somehow like like something I was going through it because I don't post anything. And I checked Twitter every few weeks and I happened to go in and I saw on my timeline something you had an interview and I've seen you do things before and I've always loved your work. And but I noticed in my thing, I

didn't follow you. I said, oh, let me follow. So I because I don't know how. I I because I lost track of you. Yeah, man. And then I was like, is this really Mike Alkin? Is that you? I said. Yeah. And then that was that. But yeah, so that's great. I'm glad we connected, as am I, as am I, and I I hope to. The extent that this gets the word out on you and your firm, I hope you get some good inbounds and I, I hope maybe some more informed calls come in. And I, I appreciate you teaching

my, my listeners something. Is your podcast still up? No, I haven't done that since 2019. Yeah, I didn't know if it was still in the feed or something. That's a good question. I don't know. Yeah. People should listen to it, to the. Extent your content is your resume. Your resume is loud and clear on this idea and I recommend you for it. There's a bunch of stuff on YouTube. We don't have a channel, but I've. Done interviews and stuff like that?

Well, good deal. How can people get in touch with you? I think if you go to Sachem Cove. Dot com there's a way my I have a business partner, Tim Rotola, who runs the that side of the business. I don't go to the website, so I don't know, but I think it's sachem.com. Yeah, we'll, we'll drop it in the show notes and again. Thanks for your time. It was a pleasure and I really enjoyed it. Thanks so much. All right. Mike, take care. OK, bye.