Arbitrage opportunity?

Cameco (CCO-T) is a uranium producer. Uranium Participation Corporation (U-T)  is a company that invests substantially all of its assets in uranium oxide in concentrates and uranium hexafluoride (collectively “uranium”), with the objective of reflecting value of its uranium holdings. Understandably, Cameco tends to mirror the movements of uranium prices – and the participation units – pretty closely. The chart below illustrates this trend (noted via my trend lines). It also illustrates the tight relationship via the correlation line, which is the bottom pane of the chart. When the line is above the middle divider in that pane, the relationship between CCO and U is positive. That is, they are moving together – be that up, or down.

When the two diverge, you can sometimes get a bit of an arbitrage opportunity. Right now, CCO (black line) is down a bit on – from what I understand – a bit of legally wrangling. Note my circled price point on the chart.  Meanwhile, uranium (red line) is up of late.  Apparently the company was awarded less than anticipated in a recent damages suit in a supply contract they were involved in. Astute investors are welcome to read the reports and post their interpretation in the comments below. It is above my paygrade to fully appreciate or understand the situation.

However, as someone once said…”I may not know much about art – but I know what I like”. That quote BTW has been attributed to both Mark Twain. And to John Cleese in Monty Pythons “Last supper sketch”, where he portrayed the Pope discussing the famous painting with Michelangelo.

You simply must see the live sketch !! But come back to the blog when you’ve finished laughing.

To paraphrase …I may not know much about contract disputes, but I know a potential arb opportunity when I see one. If CCO investors manage to get past the current news, it would be of no surprise to see the stock play catch-up. We’re long CCO in our ValueTrend Aggressive Growth Strategy. Its not a trade for the conservative investor, but it may be a short termed opportunity for a risk-orientated trader.

BTW- Equity Clock shows us that uranium can be a bit bearish in the summer, so the case for a long termed trade might not be made for the commodity, or CCO, until September.

 

Keith on BNN

Here is the link to the full show from last night’s MarketCall show.

 

Incorporating Technical and Fundamental Analysis

I was interviewed by Robin Speziale who is the author of Market Masters and  Capital Compounders. He has a podcast that is normally a subscriber-only podcast on growth investing.

Robin asked me to address the act of combining technical and fundamental methodologies into a trading plan. I believe that this conversation will be helpful to readers of the blog – so I asked Robin if I could provide access to the interview for my blog readers without you having to subscribe. Here is the interview – I hope you enjoy it!

 

Toronto MoneyShow

Get a head start by registering for the MoneyShow. I’ll be speaking on Friday September 20th at 4:15 PM.

This year, I will be presenting some strategies taken directly out of our VTAGS (ValueTrend Aggressive Growth Strategy) platform. I think you’ll find it informative! Here’s the link to register ahead of time – at no cost!

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