Seeking Alpha

BlueCut Capital's  Instablog

BlueCut Capital
Send Message
View BlueCut Capital's Instablogs on:
  • Odyssey Marine: Black Swan Shorts Sweating Bullets Post-Ruling

    The rapid rise in Short Interest going into the ruling on Odyssey Marine’s Black Swan forces one to tip their cap to those on dark side, well done.  The only problem: the stock didn’t get crushed.  Now, the risk is skewed to the upside with plenty of stock still sold short.

    I stick by my analysis that the company continues to be undervalued and still believe the stock is worth $5+.  Here why:

    • Dorado, now rolled into Neptune Minerals, is one of the most interesting stories in mining.  Will it definitively work?  It is hard to tell, but if they gain traction … hold on.  Adjusting for the stock offering, I assign $100M of value to Odyssey’s stake – which is $1.37/share.
    • Gairsoppa:  Assuming they recover less than ½ of the silver bullion thought to be on board and retain 80% of the proceeds, this equates to $1.09/share.
    • Intellectual Property & Assets:  I stick with $2/share based on their technology and the value lenders assign to the assets.
    • All other wrecks:  Conservatively, I add $1 for a PV for all the remaining wrecks.

    In summary, I still arrive at a target north of $5/share for OMEX.  The market seems to believe the prospects for other recoveries and mining outweigh the disappointment of the Black Swan ruling.  With a conference call Monday that may or may not provide additional information on existing projects, there is the potential for a full blown short squeeze. Stay tuned.

    Disclosure: I am long OMEX.
    Tags: OMEX
    Sep 23 2:23 PM | Link | Comment!
  • Odyssey Marine: Spain Would Give Spain Nothing in the Black Swan Case

    With a decision pending in the Black Swan case, Odyssey Marine (NASDAQ:OMEX) is about to be in focus yet again. In reviewing legal filings, the conclusion of Odyssey's response sticks out:

    Under Spanish law, when a vessel and/or property “ceases to exist,” by sinking or other loss, the rights to that vessel and property also cease to exist. (Doc.138-89 ¶10, at 10-11.) In the interest of comity, this Court is certainly free to consider the law of the country seeking relief. (See Stuart v. United States, 813 F.2d 243, 251 (9th Cir. 1987), rev’d on other grounds, 489 U.S. 353 (1989); Fed. Rule Civ. P. 44.1.) Under Spanish law, Spain would be entitled to nothing in this case. Link


    Is US law going to give Spain the rights to property which they neither found nor recovered? Its hard to tell, but doesn't seem possible... intuitively. With the Aqua Log case in mind, handicapping the likelihood of a 757 full of coins going back to Spain seems pretty easy. No chance.

    On a side note, with the Yuzhmorgeologiya (Russian ship) on its way to find the Gairsoppa... a significant find could be on the horizon.  If estimates are correct, OMEX's take of the $260M of silver on board would roughly be equivalent to their current market cap. 

    Legal Filings:

    August 9, 2010
    Claimants Santiago de Alvear, et al. Reply to Spain's Response

    August 19, 2010
    Odyssey's Appellate Reply to Spain's Response

    Keith Bray seems to think things look good
    Odyssey Marine Exploration, Inc., Keith Bray vs The - Eleventh Circuit

    For more info on the Black Swan recovery, its well checking out the DVD set of The Discovery Channel's Treasure Quest.  

    Disclosure: I am long OMEX.
    Tags: OMEX, Long OMEX
    Jul 14 10:32 PM | Link | 5 Comments
  • Callaway Golf: Here we go again

    I wrote a year ago about this being the time of year to trade Callaway.  Right on queue, the company pre-announced a terrible quarter. 

    The only positive was that they finally got the CEO out after some comical compensation over the last few years.  With the management problem in the process of being resolved, the value investor in me stays its time to buy and hold.  However, confusing a trading vehicle for an investment is asking for disaster.  This is a company to rent, not own.

    Following the quarter, there is likely $2-$3 of upside, as investors will speculate on the company being dressed up for sale.  Buy near $5, sell near $8... its the same old story.

    Tags: ELY
    Jul 05 11:16 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.