August is the Time to Buy Odyssey Marine Exploration

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Treasure Hunter

Company Description

Odyssey Marine Exploration, Inc. (NASDAQ:OMEX) is engaged in the archaeologically-sensitive exploration and recovery of deep water shipwrecks that contain treasure throughout the world.

Odyssey’s May 2007 recovery of the estimated $500M Black Swan treasure and subsequent legal dispute with Spain has made headlines worldwide. Odyssey utilizes innovative methods and state-of-the-art sonar technology to conduct extensive deep ocean search and recovery operations on high value shipwreck targets.

Industry Overview

Sea exploration has dramatically changed due to state-of-the-art technologies that enable the search, discovery and recovery of shipwrecks that were previously beyond reach. Odyssey is transforming activities long associated with "pirates and treasure hunters", into a serious and legitimate commercial industry founded on strong business practices, a commitment to the environment and high archaeological standards. There are well over 1,000 high-value shipwreck targets ($50 million - $2+ billion).

Investment Thesis

Odyssey is our favorite “lottery ticket” play for the next 6 months given its massively outsized risk/reward profile. August is the time to buy OMEX. Odyssey has been operating in the English Channel this season. The recovery season in the Channel runs from May - October due to weather. Hence, announced recoveries usually come August - October. Odyssey arrested 2 shipwrecks on May 29, 2008 in the English Channel. It is logical to conclude that Odyssey has been working on recovery operations on those 2 sites.

Odyssey’s combination of the best research department, superior sonar technology, and the most operations experienced team combine to generate a steady flow of identified and arrested high-value shipwreck targets. In order to have a successful and sustainable business in the shipwreck recovery business, 3 requirements must be met…

  1. FINDING: Can the company consistently find the high-value shipwreck targets?
  2. RETAINING: Can the company retain the majority of the value of the recovery?

Admiralty Court
as to why it believes that the Black Swan is subject to sovereign immunity. If Spain’s support for its position is not legally compelling, it is possible that the court could signal to Spain that it feels that it is Spain’s best interest to settle the dispute or risk establishing a very negative precedent against Spain.

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Long/short equity.

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