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I've articulated many reasons why I think Odyssey Marine Exploration (NASDAQ:OMEX) will prove to enrich long-term shareholders; however the short-term setup is too compelling to ignore. The top reasons are:

1) The HMS Victory shipwreck work in the English Channel is ALREADY underway with a deal with the UK in place. Most bears have argued this recovery would never happen; well the shorts better check the AIS Nautical System because the Odyssey Explorer has been on the site for weeks. Folks, historical records indicate there are potentially 100,000 oz. of gold on the Victory. Please see the attached link p37-38 under HMS Victory -- Prizes and Bullion. I can write an entirely separate posting detailing the cargo potential, however p37 and 38 do an excellent job of summarizing the facts. If, in fact, there proves to be 100,000 oz. of gold coins, given Odyssey's 80% share, the potential value of this find is staggering. Odyssey's potential income depends on the quality of the coins etc., however keep in mind that the melt value of 100,000 oz. of gold alone is approximately $2.00 per share net to Odyssey. Odyssey's past recovery of the SS Republic yielded NET realized income to Odyssey of premiums to melt of approx 20x, and the gold coins sold out rapidly (and that was with much lower overall gold prices and a softer coin market). Similar multiples would yield pre-tax $40 per share for OMEX shareholders. Even at 10x melt, that would net Odyssey shareholders pre-tax $20 per share. Yes that's right, $20 per share. In my opinion, there is very little probability of this factored into the current stock price, potentially setting up one of the greatest squeezes that I can remember (see point 6 below) Stay tuned ...

2) In approximately 10 days, yes 10 days, OMEX will begin excavation of the SS Gairsoppa. The company has a firm deal with the UK government already in place. There is an estimated 7mm ounces of silver bullion with official documentation and the British Government saying the bullion is there. The bullion would be quick to monetize if recovered and could add approximately $2.00 per share to Odyssey's balance sheet. This is conservative as shipwreck bullion historically sells for a premium to melt. Future dilutions will be a thing of the past as Odyssey would be funded for years to come.

3) The SS Mantola recovery would begin shortly thereafter, leveraging existing recovery operations and a firm deal with the UK government in place. According to official documentation, there is an estimated 600,000 ounces of silver bullion which would yield approx 16mm.

4) Odyssey's 30% stake or 6.2mm shares of Neptune Minerals has been rising in value. The last "mark" on Odyssey's stake indicated 74mm or $1.00 per share, based on Neptune's previous round of financing done last year. However, based on information from Odyssey's most recent conference call, the value of Neptune is currently rising. For starters, Goldman Sachs (NYSE:GS) is now banking Neptune. Trust me, Goldman Sachs does not take on any private company as a client. This is a huge vote of confidence and a BIG deal for Neptune. With terrestrial mining costs exploding and the technology to mine the seabed a given, this industry has the potential to be huge. On Odyssey's last conference call, President Mark Gordon indicated that Neptune has made substantial progress in its exploration endeavors and in demonstrating the efficacy of its mining technology. The momentum in Neptune is very noteworthy, it wouldn't surprise me to see the value of Odyssey's stake in Neptune increase dramatically, with its ownership value soon eclipsing the entire market cap of Odyssey. We will have to stay tuned.

5) The potential for additional government deals is likely; Odyssey alluded to this in their most recent conference call. Governments are increasingly desperate for additional sources of revenue and it looks as if Odyssey will soon be regarded as an "enabler" to help governments find much-needed revenue. After all, a government would get free revenue at no cost to it and can have its entire cultural heritage handed to it on a platter. Or the government can keep the shipwreck at the bottom of the ocean for the next 100 years where a) the site will be torn to pieces by fishing trawlers and b) the citizens won't be able to "appreciate" their culture as it sits at the bottom of the ocean (please explain that Mr. Culture Minister). Should Odyssey nail one or more of the above recoveries and hand the U.K. government a big fat check, it wouldn't surprise me to see other governments quickly fall in line, resulting in a multi-year backlog of business for Odyssey and, alas, a long-term business model that the street will be giddy over. Combine that with a growing perception that the shipwreck market is enormous, with estimates as high as $60 billion. (Interesting in that this aforementioned article {see link} even alludes to the Victory potentially being worth $1bln). This is also an excellent article on the bright prospects of the shipwreck industry.

6) There are currently 13.6mm shares short out of 73mm total shares. I've heard the short-thesis and frankly I'm not impressed. Much of it was based on the doomsday scenario they predicted if Odyssey lost the Black Swan case. What they hadn't counted on was the Victory, the Gairsoppa and Mantola deals all being negotiated with the British Government at about the same time. They also completely missed the potential of deep ocean mining. Actually most of the reasons why the shorts are short are not only false, but frankly in the short-term I believe Odyssey will prove otherwise, setting up a short squeeze of incredible proportions. Point being, if one is short this stock, what are you playing for? I estimate on a conservative basis at least $2.00 per share of floor valuation not including any of these upcoming projects. Its stake in Neptune alone should soon be worth $2.00 per share, not to mention its 15 years of intellectual capital, research, team, equipment, long-list of projects to work on, huge market opportunity and 100mm of net operating losses (providing a huge tax benefit down the road). The company is fully funded for this entire season, heading into these big recoveries.

7) There has been a big paradigm shift in the business model: The current perception is that the shipwreck business is not a good business given difficulty in a) Finding wrecks b) Keeping ownership of wrecks c) Selling cargo. Basically: Find it, Keep it, Sell it. The Black Swan loss further reinforced the market's perception of point b. However, since the Black Swan, Odyssey has done an incredible job of proactively shifting its business model and now actively seeks out pre-emptive deals with governments (as mentioned, Odyssey has 3 deals with the U.K.). The Black Swan will prove to be the exception not the rule. As other governments come on board, as alluded to on Odyssey's most recent call, the perception will change dramatically. Odyssey has also proven its 15 years of intellectual know-how by announcing the discovery of multiple wrecks (see above), further proving their core expertise at searching at the bottom of the ocean and finding wrecks. In essence they have institutionalized the business by also proving out top-notch archeological efficacy and preserving culture concurrently. With $1500 gold and $27 silver, selling cargo will be a cake walk. Moreover, with Odyssey now targeting bullion wrecks, the time to monetization falls dramatically in those instances as bullion could be sold overnight at the London Metals Exchange ...

The upside optionality is just too great to ignore, especially with the Victory factored into the equation. Think of Odyssey's business like a bio-tech company with multiple phases of development. On that basis, it would have 3 wrecks in "Phase III″. A Biotech stock gets valued based on its probability of success for its pipeline. Why shouldn't Odyssey? For example, assign some reasonable probability that the Victory cargo is there with conservative value at 1bln, why wouldn't Odyssey's stock have several hundred million of embedded value just for the Victory? The risk/reward is so painfully skewed against the shorts and so favorable for investors.

Overall, I am extremely confident that Odyssey has a viable long-term business model with a huge runway of opportunity, combined with very high barriers to entry. Once Odyssey proves its ability to Find It, Keep It, and Sell It, you will have to pay a much higher price for this business. The time to invest is when consensus is the exact opposite with a handful of upcoming catalysts that can abruptly switch perception.

I remain a long-term investor in Odyssey Marine

Source: Odyssey Marine Exploration: Top Reasons To Be Long