Seeking Alpha

USEC stages another day of strong activity, tripling in two days

  • USEC (USU +25.5%) extends yesterday's huge gains following news of $2.5M in new funding from the Department of Energy; shares have dropped off early morning gains of as much as 65% but have more than tripled since the announcement.
  • A Seeking Alpha blog says the $2.5M influx moves the needle very little in the context of refinancing $530M of bonds outstanding, and that the stock soon will revert to fundamental valuation; post-reorganization, with convertible note holders taking the lion's share of value, equity holders will be left with less than 5% of the current trading value of the stock.
  • Uranium peers are mostly higher: URRE +8.8%, URG +5%, UUUU +2.8%, URZ +2.7%, DNN +1.5%, UEC flat.
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Comments (4)
  • Nagyfasz
    , contributor
    Comments (5) | Send Message
     
    USU is dead man walking , not for long, equity holders will get screwed, this is not GM, or FNMA where Gov is holding the equity. Amateur investors bought into the rally , they will loose it all, potential loss is ten folds for current price ( $ 10)
    2 Jul 2014, 01:06 PM Reply Like
  • docsq
    , contributor
    Comments (4) | Send Message
     
    The only place that I could find options data was a ShortSqueeze.com, and it showed that USU has great potential for a tremendous short squeeze. I wonder if this is already occurring. Anybody have any thoughts on this. I own USU stock.
    2 Jul 2014, 01:59 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5791) | Send Message
     
    Probably. A stock doesn't pop 146% in one day without a short squeeze.
    2 Jul 2014, 09:31 PM Reply Like
  • castlehill
    , contributor
    Comment (1) | Send Message
     
    The volume has quintupled the outstanding shares which can only mean that there is a classic short squeeze in play. Every convertible arb fund that is long the bonds ($530mm face) trading at ยข0.30 is trying to short the stock or hold onto their shorts. Alas, as the squeezers know, there are only 5mm shares out and impossible to borrow! Word is the annualized rate to borrow is 90% !!!
    If you're long the common shares, call your broker and see if you can lend them to a short seller for the huge premium. Or out right sell here, take the cash and buy the bonds which are trading for an implied $2.00 per share of usu
    2 Jul 2014, 05:00 PM Reply Like
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