Explosive investment ideas

Explosive investment ideas

19 January 2021 from Mikael SydingReading time: 4 minutes

In a recent podcast, I talked to my colleague Martin Sandquist about the potential for uranium, and other ways to expose oneself to the need for energy with minimal environmental impact. The conversation turned to really explosive investment alternatives, such as the royalty streaming company URC and the junior uranium exploration company GoviEx Uranium. Note that these are very speculative investments in very small companies that today have no for-profit business. Therefore, do your own analysis before you get to risk capital in these or similar companies. However, my own investment portfolio was already heavily angled towards real assets such as gold and Bitcoin, as well as environmentally friendly energy storage in the form of Azelio's aluminum thermoses, so various forms of nuclear exposure could fit perfectly.

What many may not understand is that Bitcoin is an environmentally friendly fintech alternative compared to the traditional global financial system. Banks, security companies and other players have millions of employees, countless football pitches with servers that burn electricity around the clock and thousands, if not all the way up to the million mark, with properties that are to be kept heated and air conditioned. Regardless of whether you choose a banking solution for the financial system or Bitcoin, it is of course better if the energy comes from local waste energy from renewable sources or nuclear power plants than from coal and oil.

The conversation made me think above all about exciting, high-octane investments, rather than just the theme of energy and the environment. I therefore went to Vontobel's website for Newly Issued Leverage Products. There you will currently find a number of raw material-related alternatives, e.g. Brent and WTI oil with 12 to 16 times lever with negative direction. If you think that the oil rally has gone too far since the Covid bottom in March 2020 and think that there will be a rebound soon, they can look quite attractive. I myself suspect that intensified global measures against the pandemic may put pressure on the economy and the price of oil before vaccine distribution starts in earnest, so I believe that the price of oil may fall in the short term, but above all that oil companies will do so. If you think like me, it is also bearded with 4-5 times leverage on Lundin Petroleum.

There is also a whole bunch of new bear products on corn, sugar and soy with 3-10 times leverage. I might be careful with just soy, but sugar (5-6x leverage) and corn (4-8x leverage) have a clear connection to the oil price (energy) so they can actually be seen as a variant of shorting the economy and the energy sector. For the really risk-averse, perhaps as a bet on inflation and continued negative real interest rates, the gold price that seems most temporarily depressed, or on increased need from the technology sector, there is a newly released bulletin with 15 times leverage on silver.

In addition to certificates, there are also knockout warrants and minifutures. An interesting thing in my eyes is e.g. Bitcoin with negative direction and 4-6x leverage right now, in case we would get another short-term attempt on the downside. It can be a convenient way to hedge its long position in Bitcoin if you want to take the risk from a leveraged investment in that asset type at all. My extremely positive view of Bitcoin for 2021 remains, but it would be strange if there is not a more significant correction than we have seen so far. This is wishful thinking, of course, because I personally want to get a chance to increase my holding at lower prices. In addition, there are minifutures on WTI oil on both the long and short side, as well as a bunch of individual stocks in the high multiple sector - AirBnB (Long / Short), Netflix, Tesla (Long / Short) and Snowflake.

Ideally, I would like to find a pure uranium product, e.g. for the spot price, or for a collection of junior companies, but it may not be possible to get exactly everything you want. As for Tesla in general, the situation is becoming increasingly absurd with a valuation of 30 times sales and a price that constantly sets new records regardless of what the market does. I am beginning to believe in my own analysis that there are fewer shares in free float than there is passive, compelling demand for shares in order for the funds to be able to reach regulatory weight in the portfolio. This means that the funds are forced to fight for too few shares on the market every day, which drives the price endless. What would be required for a downward turnaround is that several liability funds jointly agreed to put a maximum weight in the portfolio for companies such as Tesla, but such a change is not made in a jiffy. Thus, it is probably long-term products in Tesla that you could invest in to help both drive and ride the environmental wave upwards.

@Mikael Syding

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08/12/2021 13:28:09

 

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