Time to double-down.
Back in February, we suggested you might want to invest in Odyssey Marine Exploration (OMEX) at a little over $4 a share. The company hunts sunken treasure beneath the seas (with proprietary, side-scanning radar), and they're currently sitting on at least three big caches of silver and gold.
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And that's only what they've told us about. For reasons so aptly illustrated by current developments, OMEX likes to bring the treasure home and lock it up before they tell anybody they've found it.
Treasure hunting isn't easy. Not even when you find the gold. If you check out this chart, you'll see OMEX has fallen below $2 a share on an adverse court ruling concerning one of their biggest finds: Here's the month-old news from Dow Jones.
"NEW YORK (Dow Jones, June 4)--Shares of Odyssey Marine Exploration Inc. (OMEX) plunged as much as 64% Thursday to a six-year low after the shipwreck explorer was recommended Wednesday to return an estimated half a billion dollars in sunken cargo it had found two years ago in the Atlantic Ocean to Spain.
"Investors had expected Odyssey to succeed in the case, in part because no ship was found, only valuable debris, and admiralty laws concerning sovereign immunity only apply to sunken ships. However, Odyssey said Thursday that a federal court indicated there was sufficient evidence to confirm the site is that of the Neustra Senora de las Mercedes, a Spanish vessel that exploded in 1804, and that the vessel and its cargo are subject to sovereign immunity."
Ouch! Some investors believe this is it for OMEX. The company will have to return that Spanish treasure, and no country will ever let them pick up gold and silver again. Lawsuits will ruin them. Well, we don't think so. International Marine Law is pretty clear: If the ship is a sovereign nation's property -- usually a warship -- than the treasure belongs to the host country, but ...
Everything else is finders keepers, and this first court ruling was a Magistrate's recommendation, not a decision. OMEX says, one, nobody found a ship. There is no evidence of one, save for the cargo-- 500,000 silver and gold coins. Two, evidence showing the Mercedes was on a merchant trip was ignored, including the testimony and claims of shipping heirs. Marine Law says if a warship was being paid commercially for transporting goods, its cargo can't be sovereign. OMEX expects a reversal upon a appeal, and also notes the Magistrate's recommendation says the U.S. court does not have jurisdiction. Really.
For now, however, headlines say OMEX has to give this huge treasure -- worth up to $500 million -- back to Spain. Ya? How is Spain going to
collect it? OMEX has that treasure locked up at a secret location in the United States. If the U.S. court says they don't have jurisdiction, whose going to make OMEX give that gold back? The Spanish courts? I don't think so. Much more likely is some negotiated settlement. Plus, everybody seems to be forgetting the Sussex (another treasure OMEX has gps numbers on, and the Victory (yet another), plus the multiple locations they're not talking about in the English Channel.
This puppy ain't dead. It's a rip roaring buy.
Thanks to E-Trade for the chart.
WARNING: You are considering financial advice from a fictional stockbroker.