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Why USEC is Up 190 Percent in the Past 5 Days (USU)

USEC Inc. (NYSE: USU) is up more than 190 percent in the past 5 days and while investors are happy to take the gains, many have wondered why.

The company didn’t help. It would only say that it doesn’t comment on unusual movement in its stock but finally, two explanations have emerged.

Shinzo Abe

Japan has been a cash cow for investors in 2013. Long the Nikkei and short the yen has been the trade of choice for professional traders this year and despite the recent profit taking that flushed out many, the trade is back on and it’s working just as it has all year.

Traders have Japan’s Prime Minister, Shinzo Abe to thank. When he announced a round of quantitative easing that made the United States’ version look minuscule, investors piled into the country.

But what hasn’t made a lot of news is his pro-nuclear stance. Abe is one of the few in Japan that favor re-activating the nuclear power plants that were shut down after the Fukushima meltdown following one of the largest earthquakes in the country’s recent history.

In June, Abe said, 

“We have the responsibility to provide cheap and stable energy,” therefore “we will restart reactors approved by the Nuclear Regulation Authority as meeting the new regulations”

USEC supplies low enriched uranium to nuclear power plants in Japan and the United States as its primary markets. Now that Abe has won Japan’s upper house elections, investors are banking on the fact that he will re-open nuclear facilities and that will mean a return of one of the company’s primary markets.

Second, this news has caused a short squeeze. USEC had an 11 percent short interest but once the elections took place and investors found upside potential in the name, the USEC shorts were flushed out.

Breaking Finance News has been all over the USEC story. Read the following articles for more information:

USEC Inc. Up 25 Percent Friday

BREAKING- USEC Inc. Spike 44 Percent

USEC Inc. up 153 Percent – Trading Halted

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

 

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