(Bloomberg) — Some hedge fund managers are sounding the alarm about overvalued nuclear energy stocks, trimming their exposure after a stunning rally this year.
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Sydney-based Tribeca Investment Partners and Segra Capital Management in Palm Beach, Florida, are among funds that recently cut their bets on nuclear technology developers and utilities.
“What concerns me is that some of these things have risen sharply,” said Guy Keller, portfolio manager at Tribeca, who oversees the long/short Nuclear Energy Opportunities Strategy. As a result, it makes sense to “lower my risk.”
Still, “I would never” build a short position “because you’re one data center announcement away from blowing yourself up,” Keller said in an interview.
Investing in nuclear energy emerged as one of the most popular energy themes of the year. The rise of artificial intelligence and the massive data centers needed to power it mean that the future of nuclear energy is now firmly tied to the seemingly unstoppable rise of Big Tech. At the same time, more and more green-oriented investors have begun to embrace nuclear energy as a necessary part of the transition to a low-carbon energy supply.
Stocks caught on the wave of enthusiasm include Constellation Energy Corp., which has nearly doubled this year amid the revival of the shuttered Three Mile Island nuclear power plant, and NuScale Power Corp., whose shares rose more than Soared 800% until they peaked in the market. end of November.
Lisa Audet, founder and chief investment officer of Greenwich, Connecticut-based Tall Trees Capital Management, said she remains “cautious” about small modular reactor developers such as Oklo Inc. and NuScale, even after watching its stock prices fall.
Short interest as a percentage of shares outstanding is currently around 17% for Oklo and almost 15% for NuScale, according to IHS Markit data, compared to less than 1% for Constellation Energy.
Small modular reactors are expected to be deployed more quickly and cheaply than large-scale plants, although the technology is still developing and the first commercial projects are unlikely to take place until the 2030s, the International Energy Agency said.
The rest of Wall Street is also becoming more cautious. A team of JPMorgan Chase & Co. analysts published a 63-page report in October warning of the risk of hype surrounding nuclear stocks, even coining a specific term for the moment: “NucleHype.”
