Where I would invest R10 000 | Herenya's Petri Redelinghuys

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Petri Redelinghuys.
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News24 asked Petri Redelinghuys, founder of Herenya Capital Advisors, where he would invest R10 000, with a view to holding the investment at least for the next three to five years.


Well, the past few weeks have certainly not been short of excitement! Equity markets have squeezed somewhat on the hopes of a "Fed Pivot" and back home in sunny South Africa we find ourselves on the brink of playing a game of presidential musical chairs. We have some experience in this game with finance ministers, so I guess it is only natural to up the stakes a whole lot and play it with our president. Interesting times.

Luckily, our focus today is not navigating the short-term wildness that is the market, but rather to explore an investment with a three-to-five-year horizon. Time, in many cases, is our ally. That is also a fundamental truth I have come to learn when investing.

Over the coming weeks and months, I imagine that you will be inundated with the "value versus growth" argument and I am here to tell you that "value" is most definitely going to be the winner over the next 18 to 36 months. At least, from where I sit, that appears to be the most likely. There are going to be some great pieces on how to find value and why it is better positioned to provide returns over the medium-term. I encourage to read those and learn from them.

Today, though, we will be looking even further ahead. We are not seeking value, or growth. Rather, today we are looking at how the world will be powered in future. As we know, there is a slow and painful transition happening from dirty energy to clean energy.

In a nutshell, the world is moving from traditional coal and oil-based energy sources to cleaner sources of energy such as solar and wind power.

The reality that we as a people seem to not want to face is that clean energy is not all that clean … the cobalt, nickel, phosphorous, lithium and other rare earth minerals that go into the manufacturing of batteries and solar panels must come from somewhere. And that somewhere is generally open-cast mines that need oil and coal to operate and do massive damage to the environment.

Enter old technology!

Nuclear power has been around for rather a few decades now. It has a bad reputation for the extreme damage it does when things go wrong, but if we are really honest with ourselves, so far nuclear power has done less damage that oil and coal have. In fact, we could probably argue that nuclear disasters have caused less environmental damage than the mining operations it takes to produce all the solar panels and batteries out there already.

Also, with current technology and the quality of the solar panels in the market around the world today, solar panels must be replaced in the next 30 years. They don’t last forever after all. So, again, more mining and perhaps the realisation that solar is not the solution - at least not on a macro scale. For the home of small business, sure it can work as an interim solution, but not to sustain an entire country or continent over the long-term (I’m talking a hundred years or more).

It is my belief that the current energy crisis the world is facing will continue to worsen until such time that nuclear energy is "painted green" by regulators the world over. There are already some early signs that policy makers are shifting in this direction. Eventually we will all come to terms with the fact that nuclear power, when used responsibly and carefully, is for the next generation or two perhaps, the best option we have for efficient, clean energy production and likely the only way that we are going to get off coal and oil.

So how do we invest in it?

There are a few ways, but I will share how we have positioned our clients' invested managed offshore portfolios to take advantage of this coming change. I hope that these will serve as a starting point for you to go and investigate and decide on which investment instrument is best suited for you.

The first is, exposure to the uranium mining industry via the Sprott Uranium Miners ETF (NYSE listed). Second, slightly broader exposure to the sector, including mining, processing and production of nuclear components via the Global X Uranium ETF (NYSE ACRA listed). Third, a more concentrated play on one specific uranium mining company, in fact, the biggest uranium miner in the world via direct equity investment in Cameco Corporation (NYSE listed).

These are the ones that we are currently holding for clients and feel that any of them would be a good use of a R10 000 investment with a three-to-five year investment horizon.

We should also mention that we will likely be adding a fourth to portfolios in the near future, being direct exposure to the uranium price via the Sprott Physical Uranium Trust (OTC market, ticker: SRUUF).

There are a few other options out there and I want to encourage you to go and have a look at them. Perhaps some are more, or less suited to your individual need. Either way, if I had to invest R10 000 for the next five years right now, uranium is where I would invest it.

Follow Petri Redelinghuys on Twitter at @TraderPetri

Disclaimer: News24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, News24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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