Special value situations, Part 1- Prxi

Special value situations, Part 1- Prxi

Whopper is a deep value investor and the founder of whopperinvestments.com. He can be reached at whopper@whopperinvestments.com

One area of the market I like to look into (in addition to normal value investments, of course!) is special situations, where there is a definitive catalyst or event that will likely cause the stock price to rise and fall independent of the market. I’d considerReading (RDI) somewhat in the special situation category (the Burwood / Cinema 1,2,3 sales could be used to unlock value), but it really doesn’t completely fit the profile. However, two situations I’ve been following for a while, Premier Exhibits and Gyrodyne, do fit the profile perfectly, so I thought I’d introduce readers to them.  Both stocks have won court awards worth substantially more than the current market cap (in Premier’s case, a multiple of market cap) and should trade materially higher once the payment comes through. This post will serve as part 1 in my special situation series (focusing on Premier), and you can find part 2 on Gyrodyne here.

I’ve mentionedaboveaverageodds andvariantperceptions, and I urge you to read their write ups. For those of you too lazy to follow the links or dig into the name, maybe this will whet your appetite- the company currently has a market cap of ~86m and an EV $80m. Now read this quote from their 8-K filed August 13, 2010.

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“In the investor call management of the Company referenced the court’s determination that the fair market value of the artifacts recovered in expeditions conducted in 1993, 1994, 1996, 1998, 2000, and 2004 is approximately one hundred ten million dollars, and that the fair market value so determined does not include an additional forty four million dollars of additive value found in the appraisal and attributable to the digital and video archives and other hard costs, such as the costs of salvage, lab operations and exhibition. Each of these disclosures is also included in the opinion of the court. Management also referenced the approximately thirty five million dollar appraised value of artifacts recovered in a 1987 expedition and to which the Companyalready has title pursuant to the award of a French Maritime Tribunal. This figure was also disclosed in the press release announcing the August 13, 2010 investor call.”

So the Titanic assets are worth well in excess of $150m. How bout this quote from an October 8-K?

“Additionally, on the conference call, Chris Davino, President and Chief Executive officer of Premier, commented on the total possible value of all of the Company’s Titanic related assets and claims indicating his belief that, taken together, their total value could exceed $200 million.”

If you assigned no value at all to their Bodies franchise, the Titanic assets alone would be worth more  than a double of current market cap!!! Clear catalyst coming in August (by August 15, 2011 specifically), when the judge will decide whether to give the company $110m in cash or in the form of the artificats. Personally, I’d like it in cash just so the company could immediately pay out a dividend well in excess of the stock price, but either way, I think the stock belongs much higher.

I haven’t seen anything from the company recently discussing the status of the award (if they have a definitive payment date, and if they are receiving cash or artifacts), so if any readers see anything on it, I’d love to hear a comment.

Disclosure- LONG PRXI


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Related posts:

  1. Premeir Exhibits – trading at a discount to asset value
  2. Atel Cash Distribution (ZZEFB) – a special situation worth a look
  3. How to find great micro-caps
  4. Gorge your portfolio on star buffet?
  5. Additional thoughts on the retailers


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