In some individual stock news, Athabaska Oil managed to come to an agreement with the Fort Mackay First Nations (FMFN) over their objections to the development of the Dover Oil Sands project.  This should clear the way for the Alberta regulator to give their final approval to the project (which had been held up by the FMFN successful Appeal of the initial approval of the project).  This, in turn, would allow Athabaska to complete the sale of their interest in this project to PetroChina for $1.32 billion.  The stock has gained almost 30% so far in 2014 on the expectation that this deal will go through and that the company will also announce a joint venture on its Duverney light oil properties.

There was lots of big news in the technology sector in February as well.  The US$19 billion acquisition of mobile messenger WhatsApp Inc. by Facebook was somewhat reminiscent of the euphoric valuations reached in the latter stages of the technology bubble that ended in 2001.  While WhatsApp has over 450 million active users, it has little revenue and has not defined how it can make money from users of this service.  While we continue to own and like Facebook for its dominant position in mobile social networking and its strong profit growth, the deal also highlights potential value at one of our other recent purchases, Blackberry Inc.  We re-invested in Blackberry when John Chen came on last fall as their new CEO.  While having a successful history as a turnaround CEO at Sybase, what we really like is that he is highlighting the attributes of Blackberry that we always felt were the keys to its resurrection as a viable company.  First of all he de-risked the company to a large degree by moving the more volatile handset business into a joint venture with Foxconn in Taiwan.  He has also focused the growth going forward on the software and security strengths of the company.  The powerful QNX software that is the backbone of the BB10 also got a lift this week from the rumour that Ford is looking at it to replace the Microsoft-based product in their cars.  The company has also allowed the Blackberry servers, which remain the dominant brand in the corporate market, to service other wireless platforms such as IOS (Apple) and Android.  Finally, the WhatsApp deal does put BBM (their messenger platform with over 80 million users) into the spotlight.  If WhatsApp is worth US$19 billion to Facebook then the BBM platform must have a substantial value as well.  The risk is that we know the next few quarters will still show declining sales and operating losses.  But, with a market capitalization of around $5 billion and nearly $3 billion in net cash, the market is still putting very little value on the operations.  If John Chen can stop the cash drain and get some of the software initiatives generating growth again then this stock could easily double over the next few years.

Last month we made some positive comments on the Uranium market, largely on the expectation that Japan will reverse their decision to shut down all of their nuclear reactors.  The government of Shinzo Abe has now published a draft of the new Basic Energy plan, which effectively reverses the previous government’s decision in 2012 to close all of Japan’s nuclear plants for the next several decades. The Industry minister did comment that the government still plans to reduce the country’s reliance on nuclear energy as much as possible, but Abe has previously declared his support for a restart of around 20% of the 50 reactors left, all of which are currently shut down pending safety checks.  The uranium stocks have surged in the past few days on this news.  While we are very positive on the longer-term outlook for this sector, there is still ample supply in the short-term and spot Uranium prices are still in the US$35 range. The Japanese utilities have already stockpiled enough Uranium to get reactors started and the Chinese have been buying in anticipation of their expansion over the latter part of this decade.  The sharp recent move in the Uranium stocks might be a bit pre-mature and we have lightened up a bit on some of our positions in the sector, most notably selling some Cameco after it rallied over 20%.

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