Guy Keller is portfolio manager of Tribeca’s Nuclear Opportunities Fund. The Sydney-based firm oversees around $3.5 billion in assets.
Has Donald Trump’s election win bolstered your confidence in nuclear? His administration appears likely to roll back renewable energy capabilities.
I believe Trump will be
good for nuclear and uranium supply from favoured jurisdictions.
To “make America great again”, Trump needs cheap oil and cheap electricity. One of the main issues holding back new nuclear capacity in the United States has been declining long-term demand for new grid electrons.
But companies like Microsoft are now willing to sign multi-decade power purchasing agreements at a substantial premium to wholesale prices, causing active nuclear reactors to apply for life extension and capacity uprates as well as plans to restart idled nuclear capacity.
The bottlenecks now lie in security of nuclear fuel supply, and lengthy delays associated with regulation and permitting. A
Trump administration with Tesla founder Elon Musk at the helm of the new Department of Government Efficiency could potentially solve those issues. Data centre demand for clean and reliable electricity will only continue to grow globally.
This is the beginning of a new energy paradigm and investment opportunity. This is why exposure to nuclear innovation is now roughly 25 per cent of the portfolio.
Which stock in your fund has the most near-term upside?
Boss Energy is the favourite. They are producing uranium from two mines, Honeymoon in South Australia and Alta Mesa in Texas. Trading on a price to net asset value multiple of roughly 0.50 times when it should be closer to one times, it sits alongside advanced development projects on greenfield sites, which means it is undervalued. Like many of its
ASX-listed peers, it suffers from elevated short interest, but that is a thematic trade and not company-specific. When those shorts move on to another commodity thematic, all the ASX-uranium stocks will play catch-up to their US peers.
Have you noticed any change in sentiment towards nuclear energy in Australia in the time you’ve been investing the space?
Yes. When we launched the fund seven years ago, people thought I was crazy, but there has been a real shift in positive attitudes towards nuclear power in Australia. The AUKUS deal was largely accepted without too much fanfare and there has been a real awareness of how nuclear power is not only reliable but also a source of low- to zero-carbon electricity.
The majority of younger Australians accept the green credentials, and older generations express frustration that this energy source is banned because of political ideology and not facts. In some ways, the political debate has kept the issue in most living rooms, meaning more Australians might question why this is illegal when 33 countries have safely used nuclear energy for decades. Remove the ban, and allow corporate, academic and scientific Australia to review the case. This also allows government departments to dedicate resources to review the case.
Will next year’s federal election impact how you invest?
The majority of the investments in the portfolio are global, as are the demand drivers. A change in the federal government will not necessarily alter my investment strategy in the near-term unless it results in Queensland and Western Australia changing their anti-uranium mining views. I believe that removing Australia’s nuclear energy ban will open several new conversations with corporate Australia as well as global nuclear energy providers. A ban removal would also likely pique investor interest in the uranium sector (and my fund)..
Any podcasts you’d recommend?
Too many to mention, but I am starting to prefer shorter episodes to fit my daily commute! I do have a soft spot for
Crux Investor (and have featured several times on his show).