Sunday, July 29, 2007

Odyssey Marine, Gentlemen o' Fortune

For any of you who watch public television, you may have seen a fascinating segment profiling the underwater exploration of a shipwreck site called the S.S. Republic, discovered in 2003 after twelve years of searching.

That ship had sunk off the coast of Georgia in 1865 carrying a cargo of coins valued at the time at about $400,000, which in today's money is almost $200 million. It had been headed to New Orleans with the coins and other supplies to help in reconstruction after the Civil War.

You can see the page National Geographic set up here full of history and images.

More recently, the company announced in May 2007 that it had discovered a larger, still-unknown wreck off the coast of Spain code-named the “Black Swan”, with a treasure of coins and artifacts estimated to be worth about $500 million.

Can you say, “YARRR?!?”

Odyssey Marine Exploration is the company behind both of those finds. They primarily operate in shipwreck exploration but also have a themed shipwreck segment, exhibiting treasures and showcasing exploration methods. And if you can believe it, this is a publicly-traded company with the symbol OMEX on the Nasdaq.

So what's the big deal, you ask?

Well, according to this researcher we currently have a massive price dislocation, based on short-term news in terms of fundamentals versus valuation, and it's an opportunity worth capitalizing on immediately, before investors realize that they missed a huge chance to pick up shares on the cheap.

Shares closed at $5.0001 on Friday, giving the company an equity cap of just $235 million.

After the announcement of the discovery of the “Black Swan” the stock shot up from $4.60 on May 17 to $8.32 per share on May 18, an increase of 81%. At $8.32 per share the market cap is just under $400 million.

Image Hosted by

I know what you're thinking.... a current $235 million market cap when they just found $500 million of treasure? How can this be possible?

Well, the reason for such a low current valuation compared to find is because of short-term news, where the OMEX exploration vessel the Ocean Alert handling the “Black Swan” effort was forced to return to Spain after an apparent surprise boarding only a few days after leaving Gibraltar. Spanish officials had seized documents and even a laptop to gain information about the vessels activity.

According to Spanish newspapers the recovery effort was being conducted illegally, despite full transparency and OMEX covering all legal bases beforehand. Spain seems to think that the ship was in Spanish waters when in fact it is located in international waters in the Atlantic, unaffiliated with any country's territory.

Scurvy dogs the Spanish be, right!?

Odyssey has been straightforward and conservative in its approach to other shipwreck sites and I believe this time is no different.

So OMEX is wrapped up in court right now, trying to prove that their efforts are legitimate and have been made so by abiding by all necessary and applicable international laws. In the near term, this could put downward pressure on the stock.

But in the longer term, I have every reason to believe that OMEX is on the level and will persevere. And more importantly for us that the stock price will flourish.

Just think about the numbers.

To get to a $500 million market cap means that the stock would see $10 per share, and that is the value of the treasure from just ONE of their shipwrecks, the “Black Swan”.

I think you can extrapolate out what else can happen from there....



Dinosaur Trader said...


You have an excellent flair for finding these "story" stocks... what to do when Castro dies... how to profit from hidden treasure...

I love it.

I mean, I don't even care if even of these stocks IS a good investment. They're just fun to hear about!

Thanks! DT

JJ2000426 said...

Those coins will not be worth $500M. Actually FAR LESS than $500M. They found about a quarter million silver coins. Each one of the silver coin, based on their rarity, could be appraised at $2000 a piece for numismatic value. Of course that was based on what collector's perception would have been WITHOUT these quarter million newly discovered coins.

When I pay $2000 a piece for a silver coin, I expect it to be a one of a kind rarity. Why would I pay $2000 if I know there are at least a quarter million more of silimar things floating around the market? Might probably be worth only $20 a piece.

bloggerdotcom said...

I'm not sure you follow, jj.

Please study these segments from a DJ article in May:

1. "A jet chartered by Tampa-based Odyssey Marine Exploration Inc. (OMR) landed in the U.S. recently with hundreds of plastic containers brimming with coins raised from the ocean floor, Odyssey co-chairman Greg Stemm said. The more than 500,000 pieces are expected to fetch an average of $1,000 each from collectors and investors."

2. '"For this colonial era, I think (the find) is unprecedented," said rare coin expert Nick Bruyer, who examined a batch of coins from the wreck. "I don't know of anything equal or comparable to it."'

3. "Bruyer said he observed a wide range of varieties and dates of likely uncirculated currency in much better condition than artifacts yielded by most shipwrecks of a similar age.

The Black Swan coins - mostly silver pieces - likely will fetch several hundred dollars to several thousand dollars each, with some possibly commanding much more, he said. Value is determined by rarity, condition and the story behind them.

Controlled release of the coins into the market along with their expected high value to collectors likely will keep prices at a premium, he said."

Remember, this is just one ship.

Any other questions?

JJ2000426 said...

No you don't get it. The key word is the past parahraph "controled release". You think collectors are dumb and your "controled release" will fool them? They know there are half a million silimar items that will flood the market eventually. Controled release or not controled release, eventually it's going to flood the market. So if I buy one now for $2000, 10 or 20 years down the road it may be worth $20 so why should I buy?

Numismatic items obtain their value by being rare. There mere knowledge that similar items exist any where in the world at all, instantly diminishes the value.