Uranium Energy Corp (UEC)
Finally, I found a short: Uranium Energy Corp (UEC). UEC owns some land is currently doing surveys to find uranium deposits. While uranium has a great future, this fact is already reflected in the high valuations of nuclear power-related companies.
UEC has a market cap of $140 million. But they have no revenues and lose about $5 million per quarter.
They support their operation by diluting current shareholders. And will continue to dilute current shareholders as there are no revenues imminent.
If they have a large uranium find, they might survive for the long-term. More likely, they will be lucky to survive they way they dilute the value of the company to support management.
But don’t take my word for it. In their own words, as filed with the S.E.C.:
“WE HAVE A HISTORY OF OPERATING LOSSES AND THERE CAN BE NO ASSURANCES WE WILL BE PROFITABLE IN THE FUTURE.
We have a history of operating losses, expect to continue to incur losses, and may never be profitable, and we must be considered to be in the exploration stage. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totaling approximately $16,969,779 from May 16, 2003 (inception) to December 31, 2006. As of December 31, 2006, we had an accumulated deficit of $16,969,779 and had incurred losses of approximately $14,818,318 during the fiscal year ended December 31, 2006. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional uranium exploration claims are more than we currently anticipate; (ii) exploration and or future potential mining costs for additional claims increase beyond our expectations; or (iii) we encounter greater costs associated with general and administrative expenses or offering costs.”
But don’t worry about the management. They have sweet contracts. In the same SEC filing, you can see that the CEO is paying himself a generous salary ($510,000 including bonus and options) for a company with revenues of $0.
Unless they stumble across a huge uranium find, the company is worth far less than the $140 million. This is especially true when you consider how well the management will compensate themselves if they happen to get lucky.
Disclosure: As you may have guessed, I am short the stock. As always, perform your own research before making investment decisions as even good investors can be wrong much of the time.
