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Odyssey Marine Exploration Inc. Message Board

  • troopflare troopflare Nov 12, 2012 8:34 AM Flag

    OMEX: Financials As Expected And Victory Approval Inevitable In Our Opinion; OMEX Shares An Unusual Value; Reiterating Buy Rating And $6 Price Target

    Today's Craig-Hallum Note Excerpt:

    With shares drifting in over the past few weeks, we think investors are getting a great opportunity to own a catalyst-rich stock with significant upside. Victory approval is largely a formality at this point, in our opinion. The foundation’s advisory committee has already given preliminary excavation approval and Odyssey has set up a dedicated conservation facility in the U.K. to deal with Victory artifacts, a sign that management believes that the final MOD go-ahead is impending. While it has clearly taken longer than originally anticipated, we think investor patience will be rewarded once OMEX is able to begin excavation (likely in Q4). Underwater scans indicate large metal deposits, and with 75% of cannons already accounted for, we think the likelihood of coins being on-site is higher than what the current stock price assumes. With other new projects progressing (government deal, Fraser), low-risk commodity projects slated for next summer, and a valuation backstop provided by the mining holdings worth $1.35 per share, we think shares of OMEX represent an unusual value at these levels.
    INVESTMENT HIGHLIGHTS
    · Q3 Results – Odyssey published their 10-Q Thursday night and while the financials were a bit convoluted, things were as expected. The company recognized about ~$18M in Gairsoppa proceeds which were shown as an offset to operating costs (OMEX gets cost reimbursed first money out.) They will recognize another ~$7M in Q4 for total proceeds of about $25M, net of Galt. Most of the cash from the proceeds is hitting in Q4 (currently in accounts receivable), and should amount to $10-15M on the balance sheet after all splits and the line of credit are repaid.
    · Reiterating Buy And $6 Price Target – We are reiterating our Buy rating and $6 price target on shares of Odyssey Marine. With cash on the balance sheet and plenty of potentially-monetizable events planned for the next 12 months, we could see our price target move higher as late-stage projects come to fruition.

    Sentiment: Strong Buy

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    • Craig Hallum is overly optimistic, as usual. What evidence is there to support there is a likelihood of gold coins on the Victory? Aside from a single blurb in a newspaper...

      I think OMEX is undervalued, but not for the reasons outlined in this article. Seems to me that CH would rather pump the stock and then sell it, than provide insight based on facts and not mere speculation...

      • 2 Replies to mr32slim
      • Mr Slim - I respect your healthy skepticism regarding CH's agenda, but for one moment please allow me to postulate that you may want to forget direct evidence from a 268-year old occurrence and remember human nature.....across cultures and history, weapons (i.e. firearms/cannon), cash, and other contraband have usually been in close quarters given their propensity to attract attention (not to mention each other). In it's time, HMS Victory had more mobile firepower at it's disposal than anyone - the biggest guns, and a lot of them to boot. Wouldn't reason suggest that it would have made a most logical transport for a large quantity of valuables, especially when it was common practice for ship commanders to pad their pockets in providing secure transfer services for such items?

        Sentiment: Strong Buy

      • as the report states, underwater scans support the likelihood of gold coins

    • just to add a rich real cash potential...from their Q

      " However, it is likely that we could monetize a significant amount of cash from our existing shipwreck projects or the sale of equity in our mining projects in 2012 or 2013 which would fund our operations for future periods"

      They wouldn't mention that if their agreement with Neptune did not allow Odyssey to potentially sell all or part of their Neptune stake to other investors. If they chose to do so.

      So the present nominal illiquid value of their Neptune stake (well over a hundred million) is perhaps not really all that illiquid. If they sold all or part of it to other investors, they would have to do it at a discount, but that still could be a mighty large pile of cash.

      Likewise IF Chatham gets licensed.......that stake probably also would be worth a more than fair amount

      Which, in any pinch, actually could prove to be GREAT!

    • Great post thanks.

      Sentiment: Hold

 
OMEX
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