The company which is developing enrichment technology for uranium and silicon has whipsawed between $3 – $4 a share over the last few months, currently trading nearer to the low end of the range following a 10% drop in the last week. While listed as a technology company, Silex is included in the Solactive Global Uranium & Nuclear Components Index which is the benchmark index for some ETFs such as the Global X Uranium ETF (URA US). Being in an index and/or ETF is a natural provider of liquidity, and when new units of the ETF are issued the ETF providers buy the underlying shares which has helped to prop up Silex.
The flip side to that is short selling can build as traders can get better access to borrow (ETF managers can lend out their stock for a small fee for short sellers, something not often easily available on smaller stocks). Short selling has made up a significant portion of trades in Silex over the last month and short interest now makes up more than 5% of issued shares, up more than 1% in the last month, which has clearly weighed on the stock. We suspect the short-selling push is nearing a limit given the liquidity of Silex, and any positive news often leads to outsized gains on shares with larger short positions.
- Silex is well funded, developing important technology for the energy transition with strong US Government support.
MM is bullish SLX
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