large order is real, page-44

Spec vs investment - can be a fine line of differentiation

For me a spec is taking a punt on nearology or starts ups be it in mining, retail, media, biotechnology, or just about any small cap. Buy for peanuts on your assessment of their model/circumstance and accept the risk/reward accordingly.

In mining or energy stocks, the main criteria you need to get your arms around to determine the level of spec/investment:

1. Surety of resource (JORC or think viable product)
2. Access to capital
3. Management expertise
4. Surety of approvals, critical in mining, biotechs. Outside these areas - substitute brand or ability to gain distribution
5. Will that resource (or product) have a future market - for PEN this is the most critical consideration: the future of nuclear energy. It is also the most important factor generally, driven by market and regulatory forces, e.g. David Jones, McMillan Shakespeare, Billabong, any media company, most manufacturers.

For me, PEN satisfies enough criteria to be considered a LT investment - only because I think nuclear energy has a decent future. One could argue this is speculative, then so is much of the retail, media and many other sectors.

Are Cameco, Areva and Paladin speculative or investment? I'm willing to put PEN in the same category, as we've (almost) ticked enough boxes to justify.