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Demand for uranium spiked in 2023, nearly doubling in price. The Federal Reserve said the global price of uranium jumped from $39 per pound at the end of 2022 to over $$70 per pound by last December. It peaked at over $81 a pound in February, but has since pulled back to around $64.60 today.
However, long-term contracts for uranium have recently hit 16-year highs . Reuters reported Cameco ( NYSE:CCJ ), one of the world's largest uranium miners, said "With a stronger market environment, we're currently locking in ceilings of about $125 to 130 per pound and floors at about $70 to $75 per pound in market-related contracts."
The rising demand is being driven by data centers. As artificial intelligence has swept the world, hyperscalers like Amazon ( NASDAQ:AMZN ) and Microsoft ( NASDAQ:MSFT ) have been pouring more resources into building out greater capacity.
Because AI is such an energy hog due to the complex computational processes it performs, it consumes large quantities of available energy resources. In response, data centers are increasingly turning to lower-cost nuclear energy to power their operations. Earlier this year, Amazon itself bought a nuclear-powered data center from Talen Energy (NYSE:TLN) for $650 million.
The World Nuclear Association estimates demand will grow 28% between 2023 and 2030 but then spike 51% between 2031 and 2040. Much will depend on the number of new reactors that are built.
With this long runway of growth ahead, it is surprising to find billionaire hedge fund managers bailing out of Cameco. Let's take a look at three of the top investors who completely depleted their CCJ stock, and what these sales may mean for you.
24/7 Wall St. Insights:
- Uranium is in high demand, particularly from data centers as artificial intelligence has rapidly and dramatically increased their energy usage.
- The World Uranium Association sees uranium demand growing 28% through 2030 and then accelerating to 51% for the next decade.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report . It features a software stock we’re confident has 10X potential.
Billionaires bailing
Demand for nuclear power is being driven largely by data centers because of massive energy consumption by AI
The hedge fund founded by the late-Jim Simons, Renaissance Technologies , sold over 68,000 shares of Cameco in the second quarter at an average price of around $46 a share. A year ago, Simons held over 1.3 million shares, but steadily sold down large tranches of stock.
Because Renaissance Technologies had an average buy-in price for Cameco of around $28 a stub, the hedge fund realized an 83% return on its investment, but it seems like a lot of long-term profit potential may have been left on the table.
Similarly, John Hussman at Hussman Strategic Advisors was selling off a $1.9 million stake in Cameco. He got out of the uranium miner by dumping 41,000 shares onto the market. However, he wasn't a long-term holder of the stock as he had only accumulated his position in the first quarter of 2024.
As a result, Hussman's quick turnaround with the purchase and sale of CCJ stock may have been just an attempt to capitalize on uranium's demand in the market.
The biggest seller in the second quarter, however, was Stanley Druckenmiller of Duquesne Family Office . The legendary investor sold nearly 849,000 shares, completely emptying CCJ from his portfolio. At the average sale price of $46 per share, he unloaded around $39 million worth of stock. As Druckenmiller had a fairly consistent position in the uranium money for at least a year, it was a notable turnaround in its position.
Should you sell Cameco?
Cameco stock isn't cheap, but there are significant tailwinds building behind it, uranium, and nuclear power
These weren't the only sellers of Cameco shares. Investment management company Squarepoint Ops also sold out, shedding 73,000 shares that it had spent the prior three quarters building up. Other notable sellers include Steven Cohen at Point72 Asset Management who sold 99% of his holdings while Ken Griffin at Citadel Advisors sold 95% of his position.
Before you follow these billionaires out the door, know there were many buyers, too. For example, Ray Dalio at Bridgewater Associates nearly doubled his position in Cameco. He now owns over 2 million shares, making him one of the largest owners of the miner.
Cameco stock is up about 20% in 2024 and 38% higher over the past year. Shares are pricey, though, at 40 times next year's earnings, 11 times sales, and 66x free cash flow. But considering the tailwind behind uranium, even though I might not be backing up the truck to purchase shares right now, I wouldn't be a seller either.
Investors may be better served waiting for a better price, but buying CCJ stock -- and then buying more on weakness -- seems like a winning, long-term strategy.
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