Why Odyssey Marine Is Worth Exploring

| About: Odyssey Marine (OMEX)

Its easier to pass on Odyssey Marine (NASDAQ:OMEX) than to understand the story. In the past 12 months the company has been kicked out of an index, redefined its business model, had a material development in its dispute with Spain, and is seen the entire shareholder base turnover. Based on this introduction I'm sure I've lost half my audience, but for those remaining, OMEX is worth exploring.

To keep it brief (it's worth reading a filing or two in order to really understand OMEX), here is a quick sum of the parts:

Black Swan -$7.50/share

A potential settlement following WikiLeaks could yield upwards of $1B based on the recent silver move. A settlement resulting in $500M to OMEX is worth $7.50/share based on the current share count. Any settlement value is a multiple of the company's current market cap. The silver is in the US and I doubt any is going back. Check out Treasure Quest for more.

Assets & IP - Managerial vs. Financial Accounting - $2.00+/share

Assigning fair value to Odyssey's assets and IP paints a drastically different picture of this company with respect to liquidation value.

PV of 10 $50M Targets - $2.00/share

Based on the identified high value target universe, we assign a recovery of 50% to only 10 of the 100+.

Dorado Resources - $1.75

This stake is worth more than half the current market cap of the company. The economics for deep sea mining work even with a 50% decline in metal prices. Based on a comparable valuation of Nautilus Minerals [NUS.TO], OMEX's interest is worth $1.75/share


This isn't DCF, but gives an estimate of the value we see. Is $5.75 - $13.25 a wide range? Absolutely. However, 13.25 may be conservative.

Black Swan $7.50
Assets & IP $2.00+
PV of Targets $2.00
Dorado Resources $1.75


Even if you don't like the chances for the Black Swan, the company is still worth $5.75.


  • New Find Announcements - Recent filings indicate the discovery of at least one high value target. Victory, Gairsoppa, & Sussex are high value targets to get excited about if you see a press release
  • Black Swan Legal Case - WikiLeaks was a material event for OMEX
  • Index Reconstitution - In June, the same index funds that punted OMEX a year ago will need to buy back a minimum of 5M shares. Given the current shareholder base, liquidity is not going to be on the side of this group.

The icing on the cake is a $105M NOL.

Disclosure: I am long OMEX.