Weekly rollup | Jan 09-15 2023
Stocks Mentioned: Blink Charging (BLNK), Frontline (FRO), Euronav (EURN), DHT Holdings (DHT), Uranium Miners ETF (URNM), Sprott Physical Uranium Trust (SRUUF), Energy Fuels Inc (UUUU, EFR.TO), Cheniere Energy (LNG), Cameco (CCJ)
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January 09 2023
An idea for those more daring than me is arb trading using Blink Charging (BLNK) warrants, expiring Feb 16 (next month). The warrant has a strike price of $4.25 and closed at $6.99 on Friday.
January 10 2023
Frontline (FRO) dropped its attempt to buy Euronav (EURN)
Merger arb traders unwinding their bets are going to swing shares of both companies wildly today. I said back in April that:
"EURN and FRO are both controlled companies, so the concerns of individual investors will likely go unaddressed, which will beget selling on their part. Or, it could go the other way and investors may rush in to bid both stocks, signalling their endorsement of the deal. That's not something I want to speculate on in my shipping portfolio. My exposure should oil tankers should reflect my outlook on oil tankers, not be based on backroom negotiations between European institutions and families."
Sitting it out turned out to be the right choice for me. If I were long, I'd dump shares in both companies and stay on the sidelines until the dust settles. Probably many months from now.
China’s manufacturing activity declined to 47.0 in December, the lowest reading since February 2020 whilst services activity contracted for the fourth straight month, coming in at 48.0 in December.
January 11 2023
Time to close the DHT Holdings (DHT) short
I top ticked it by recommending a short at the very peak on 11/22. This was a short based on valuation, with my valuation model suggesting a fair value of $6.28 per share.
However, yesterday's update on TCE rates made me re-think. In Q4 2022, the company earned a TCE rate of $56.9k/day on its VLCC fleet, with spot rates averaging $63.8k/day. In Q1 2023, spot rates crossed $70k/day and the overall TCE rate on bookings so far average $52k/day.
The market for VLCCs continues to remain strong.
Technically, after moving below the 100 DMA earlier this month, the stock has bounced back above the 100 DMA and may have additional upside.
I also understand that oil tanker investors now have a more favorable view on DHT given the legal fight that's starting to brew between Euronav and Frontline over the failed merger. Yesterday saw a volume spike on all 3 tanker stocks.
Cover the DHT short today.
January 13 2023
The Sprott Physical Uranium Trust (TSX: U.UN, SRUUF) is holding above the 100 DMA, as is the Sprott Uranium Miners ETF (URNM).
When uranium runs, it runs really hard really quickly. Buy the Sprott Uranium Trust. I prefer physical uranium to the miners right now, but I'll look to add miners if the rally really gets going.
On second thought, let's also add a uranium miner. Buy Energy Fuels (UUUU, EFR.TO).
As with the LNG short, we may get better entry points ahead but I like the risk reward and after experiencing prior uranium bull runs (I've been into uranium stocks since 2015) I'd rather take the risk of buying now and stopping out at $4.68 (32% risk) than wait for a better entry and miss the trade.
With the Solana trade, buying at $11.78 after it had run up from $8 was difficult but turned out to be a good entry in hindsight. We've had two bullish weeks in a row and the next week might be a down week, but there's no way of knowing that in advance.
Buy UUUU, stop loss at $4.68, size it according to the risk.
Why UUUU and not Cameco (CCJ)? - Twitter Thread
January 14 2023
Solana bears getting REKT in real-time. A beauty to watch. Kraken liquidated all futures positions as the counterparty got wiped out. And SOL is still ripping higher as the squeeze continues.
If true, this isn't going to end well. FOMO is the enemy of good trading.
Federal Reserve Board announces Reserve Bank income and expense data and transfers to the Treasury for 2022
Total interest expense of $102.4 billion increased $96.6 billion from 2021 total interest expense of $5.7 billion
During 2022, Reserve Banks transferred $76.0 billion from weekly earnings to the U.S. Treasury, and, in September 2022, most Reserve Banks suspended weekly remittances to the Treasury and started accumulating a deferred asset, which totaled $18.8 billion by the end of the year.
Deferred asset is code for net loss. The Fed doesn't lose money, it counts losses as an asset, to be offset against future gains. Normal accounting rules don't apply since they can just print money.