Hedge Fund Swaps Film Studios For Uranium

In a James Bond flick, amassing a stockpile of radioactive material is an act that might raise some eyebrows at MI-6. For Anchorage Capital Group, it’s simply the logical next step after scoring $2 billion selling the film rights to the 007 franchise.

The New York hedge fund was MGM Studios’ biggest shareholder until Amazon acquired the film studio last month. And on Thursday, the Wall Street Journal reported Anchorage has put the spoils of its MGM sale towards a few million pounds of uranium.

For Uranium Eyes Only

The hedge fund’s uranium acquisition—which it made alongside corresponding investments into mining companies, specialist traders, and nuclear power plants—is a peculiar one for Wall Street, which tends to get heavy on the radioactive metal either via mining firm shares or exchange-traded funds.

And Anchorage is making a Casino Royale-style wager in a sector that has seen better days:

• Uranium prices traded at $32.05 a pound this week, according to nuclear-fuel research company UxC LLC. That’s more than a $100-per-pound dropoff from the material’s all-time high of $136 a pound in 2007.
• After appreciating substantially in the mid-2000s, the silvery-grey metal closed out the decade in near-collapse after many funds exited as a result of the 2008 financial crisis. It then spent much of the last decade hovering below $40.

Suffice to say, Anchorage is banking on a reversal of fortunes.

But Why? Going this deep on the periodic table, Anchorage needs a price revival to profitably shave off uranium to utility companies and others for delivery years in the future in what’s called a “carry trade.” But Anchorage could be stuck carrying quite a lot of the radioactive metal if prices don’t pick up.