Premier Exhibitions

[premfan]

I stumbled upon this company last week. Mark sellers is a value investor who is chairman and owns over half of the company. It is in the process of a turnaround after replacing the previous management. They own the rights to the titanic assets which is supposely worth at least a 100 million. The current market cap is roughly 60 million.  They are in court fighting for the right to sell the assets. The company has no long term debt and 10 million in cash. any opinions?

[twacowfca]

I stumbled upon this company last week. Mark sellers is a value investor who is chairman and owns over half of the company. It is in the process of a turnaround after replacing the previous management. They own the rights to the titanic assets which is supposely worth at least a 100 million. The current market cap is roughly 60 million.  They are in court fighting for the right to sell the assets. The company has no long term debt and 10 million in cash. any opinions?

 

 

Premier Exhibitions does the "Bodies" exhibits, seemingly educational, but when you dig deeper, you'll learn that their founder was run out of Germany because of Nazi ties and doubts about where he got the bodies.  He got a peirmit to bring his subsequent exhibit to the US, but these bodies now seem to have come from an area of China where the government had a prison where disidents were kept.  One of the bodies in the exhibit a few years ago apparently had a bullet hole in the back of the head.

 

In my opinion,  everyone associated with this co deserves to go to the place they richly deserve to be.

[FFHWatcher]

I stumbled upon this company last week. Mark sellers is a value investor who is chairman and owns over half of the company. It is in the process of a turnaround after replacing the previous management. They own the rights to the titanic assets which is supposely worth at least a 100 million. The current market cap is roughly 60 million.  They are in court fighting for the right to sell the assets. The company has no long term debt and 10 million in cash. any opinions?

 

 

Premier Exhibitions does the "Bodies" exhibits, seemingly educational, but when you dig deeper, you'll learn that their founder was run out of Germany because of Nazi ties and doubts about where he got the bodies.  He got a peirmit to bring his subsequent exhibit to the US, but these bodies now seem to have come from an area of China where the government had a prison where disidents were kept.  One of the bodies in the exhibit a few years ago apparently had a bullet hole in the back of the head.

 

In my opinion,  everyone associated with this co deserves to go to the place they richly deserve to be.

 

One of the investment newsletters I read did a write up on it.  It seemed somewhat interesting but I didn't do any personal digging into the investment idea, however I did not expect the input that I read above.  Interesting.  Some of the best opportunities I have passed up in my life where because of something I didn't agree with.  I look back and wonder whether or not I let me emotions dictate the decision to avoid a certain investment idea. 

Along similar lines, BeerBaron recently commented that he bought easyhome.  They are a company who lease products to people who don't want to or (but more likely) can't afford to pay for them up front and we aren't talking about a car or your house (aka wants not needs).  Admittedly, I haven't done any research on the company but my first (emotional) reaction revolves around the notion that a lot of our world's financial problems stem from people wanting and buying things they can't really afford and that companies similar to easyhome contribute to the problem.  I don't want to look any further into the company because of my initial reaction.  Is this irrational?  Is it irrational to exclude an investment idea because a former owner (I assume it was a previous owner) has a dubious past? 

[Crip1]

 

Admittedly, I haven't done any research on the company but my first (emotional) reaction revolves around the notion that a lot of our world's financial problems stem from people wanting and buying things they can't really afford and that companies similar to easyhome contribute to the problem.  I don't want to look any further into the company because of my initial reaction.  Is this irrational? 

 

FFHWatcher,

 

I do not think that is irrational at all. Understanding that there are shades of "grey" here, if you were to buy like Easyhome, there are three potential outcomes:

 

1) You lose money...which will cause you to feel like a doofus, or

2) You break even or make a little...which will cause you to think "what if" you had invested the same money elsewhere, or

3) You make a boatload of money, then feel remorseful that you essentially did so by taking advantage of individuals who were not sophisticated enough (or were so eager to over-extend) that they did financial harm to themselves.

 

My guess is that neither of these are good outcomes from your perspective. If so, it seems like a no-win situation for you.

 

-Crip

[premfan]

They are comparing the turnaround to sns. Interesting thesis... Any opinions?

 

aboveaverageodds.wordpress.com/2010/01/10/premier-exhibitions-a-favorable-high-probability-outcome-in-an-uncertain-environment/

 

 

 

Disclosure: no position

[beerbaron]

I stumbled upon this company last week. Mark sellers is a value investor who is chairman and owns over half of the company. It is in the process of a turnaround after replacing the previous management. They own the rights to the titanic assets which is supposely worth at least a 100 million. The current market cap is roughly 60 million.  They are in court fighting for the right to sell the assets. The company has no long term debt and 10 million in cash. any opinions?

 

 

Premier Exhibitions does the "Bodies" exhibits, seemingly educational, but when you dig deeper, you'll learn that their founder was run out of Germany because of Nazi ties and doubts about where he got the bodies.  He got a peirmit to bring his subsequent exhibit to the US, but these bodies now seem to have come from an area of China where the government had a prison where disidents were kept.  One of the bodies in the exhibit a few years ago apparently had a bullet hole in the back of the head.

 

In my opinion,  everyone associated with this co deserves to go to the place they richly deserve to be.

 

One of the investment newsletters I read did a write up on it.  It seemed somewhat interesting but I didn't do any personal digging into the investment idea, however I did not expect the input that I read above.  Interesting.  Some of the best opportunities I have passed up in my life where because of something I didn't agree with.  I look back and wonder whether or not I let me emotions dictate the decision to avoid a certain investment idea. 

Along similar lines, BeerBaron recently commented that he bought easyhome.  They are a company who lease products to people who don't want to or (but more likely) can't afford to pay for them up front and we aren't talking about a car or your house (aka wants not needs).  Admittedly, I haven't done any research on the company but my first (emotional) reaction revolves around the notion that a lot of our world's financial problems stem from people wanting and buying things they can't really afford and that companies similar to easyhome contribute to the problem.  I don't want to look any further into the company because of my initial reaction.  Is this irrational?  Is it irrational to exclude an investment idea because a former owner (I assume it was a previous owner) has a dubious past? 

 

Yeah, I had some ethical questions about buying EasyHome. But I figured that if some people can't even compute the effect of interests rate charges then they are doomed to be eternal debtors. I have personnally helped 2 friends consolidate their debts in the last few years, and the only results was that after consolidation both of them took their new "disposable income" and bought a new car. It changed completely my perspective... it's like trying to teach an alcoholic to be sober, if he doesn't want to change it won't work.

 

On this matter, I'm a classic case of someone that distorts it's ethics reality to justify it's means. At least I'm fully conscious of it.

 

BeerBaron

[twacowfca]

Re EasyHome:  The rent to own business is probably the least predatory and most socially beneficial of all cos that have subprime costomers.  I'm familiar with Aarons, the best in the industry.  The only general criticism against them that is probably justified is that smart shoppers with good credit can buy merchandise much cheaper than the rent to own price.  Their customers are the lowest of subprime: troglodites.  Their credit is zilch, yet the failure to return rate is far less than subprime default rates on loans: about 1%-2%.  The reason for this amazingly low rate?  They get 5 references from relatives or others in the community before agreeing to a contract.  These interested parties then have a vested interest in encouraging the renter to follow through on his commitment to pay the rent or return the merchandise, which 98%-99% do.  It's a beneficial service if performed ethically as Aarons does in almost all their business with the units they own and working with their franchisees.  Other cos may not serve this market so well as Aarons, but when well done this type of business can be very helpful in low income areas.

[OracleofCarolina]

Anybody but me bullish on PRXI? Does not appear to be much downside

and high upside.

No debt,management seems to be good,artifacts

conservatively valued around 2.40 or so

a share, and an expediation to the Titanic starting Sunday.

 

forget about Bodies...the value is on Titanic

[twacowfca]

Anybody but me bullish on PRXI? Does not appear to be much downside

and high upside.

No debt,management seems to be good,artifacts

conservatively valued around 2.40 or so

a share, and an expediation to the Titanic starting Sunday.

 

forget about Bodies...the value is on Titanic

 

The Bodies were run out of Germany because of The Nazi medical experimentation on sacrificed concentration camp prisoners connection to their founder.  How can you ignore that?  

[OracleofCarolina]

That's Body World exhibit...that is a different company.

[twacowfca]

That's Body World exhibit...that is a different company.

 

Is the other company related in any way to the one formed by the Nazi doctor's son?

[ragnarisapirate]

http://mises.org/books/defending.pdf

or if you feel like paying for it:

http://www.amazon.com/Defending-Undefendable-prostitute-moneylender-scapegoats/dp/0930073053

 

It is a book called "defending the undefendable." basically, it defends the economic and moral worth of the most sketchy characters you can imagine... Libelers, Prostitutes, Corrupt Cops, Drug Dealers, Slumlords, and even Middlemen...

 

But seriously, it is a really good book that is pertinent if you really want to think about 'investing ethically'...

 

As a side note, I don't invest in PXRI, not because of the ethics, but, because I don't know how to value dishware from the bottom of the ocean. I am actually happier to eat our of take out containers than, say, Waterford china. Since that is the case, I don't think that I should own some of the stuff that was sunk on a poorly constructed ship, which can't have another movie made about it for at least a decade. ;)

[twacowfca]

I've been following PRXI for a couple years.  I was drawn to their situation because it somewhat reminded me of Buffett's Arcata Corp. arbitrage experience described in BRK's 1988 letter.  To evaluate PRXI, I recommend reading not only the usual SEC filings, but also several quarterly call transcripts, court documents relating to the salvage award, and listening to the two recent audio recordings about the court decision and the current Titanic expedition.

 

Management/Ethics:

 

- The company has changed ownership several times over the years.

- The previous manager was greedy and incompetent and nearly ran the company into the ground.

- From what I can tell the current managers are simply capitalists working to unlock value after a takeover.  I haven't detected any nefarious intentions.

- The company uses its exhibits to educate on the Titanic, the human body, and blindness (see Dialogue in the Dark).

- For at least a few years the company has maintained on its website a disclaimer about the origin of the bodies (a bit disturbing I admit):  http://www.prxi.com/nycdisc/

 

Event Arbitrage:

 

In my mind the value of this company hinges on three things:

- Management's ability to generate positive cash flow.

- Management's ability to extract value from the Titanic's 100 year anniversary; coming up in 2 years.

- Management's ability to capitalize on 3 sets (yes, 3 sets - listen to the audio and read the court documents) of Titanic assets appraised at nearly $200 million.

 

I strongly urge you to do your homework.  No matter what you conclude I think you will find it a fascinating study (One key from the Titanic recently sold for well over $100,000.  PRXI possesses 5,000 items salvaged from the ship's wreckage).

 

 

 

Maybe they could also sell some of their bodies as collectibles.  Especially the one that came from the area of China next to the prison that held the dissidents, the body that appeared to have a bullet hole in the back of the skull.

[dcollon]

Some interesting comments in an 8-K just filed:

 

During the conference call with investors on October 7, 2010, Mark Sellers, Chairman of the Board of Premier Exhibitions, Inc. and Managing General Partner of Sellers Capital, stated that Sellers Capital is no longer marketing its 46% ownership stake in Premier. Mr. Sellers stated that Sellers Capital no longer has a specific time frame within which to sell its stake in Premier.  Instead, Mr. Sellers indicated that Sellers Capital would retain its shares in the Company until such time as it could obtain what he believes to be a better value for the shares. This follows a previous announcement by the Company, made on June 21, 2010, that Sellers Capital was looking to sell its shares in the Company over the next twelve to eighteen months. Mr. Sellers indicated that this change stems in part from the August 12, 2010 order from the U.S. District Court for the Eastern District of Virginia determining the value of a salvage award to be issued to RMS Titanic, Inc., a wholly owned subsidiary of the Company. In that order, the court determined that the Company would be entitled to an award equaling 100% of the fair market value of certain Titanic artifacts, which the court determined to be approximately $110 million, for its work in salvaging and recovering artifacts from the Titanic wreck site. The court indicated that the award would be satisfied at some time in the future, either by issuing the Company title to the artifacts with certain covenants and conditions attached, or by conducting a judicial sale of the artifacts.

 

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. First, Mr. Davino reiterated the appraised values for the artifacts it has recovered from the Titanic, as well as the appraised value of certain of the data and work product associated with the artifacts. Mr. Davino stated that the artifacts recovered during the 1987 expedition, and for which the Company has clear title, have an appraised value of $35 million. He indicated that the remaining artifacts, which are the subject of the August 12, 2010 court order, have an appraised value of approximately $110 million. He indicated that the Company’s intangible assets, such as its digital and photographic archives, a comprehensive database and the Company’s work product (which includes undertakings such as the cost of salvage, conservation and exhibition), have been appraised as an additional enhancement to the artifact collection of approximately $44 million. Mr. Davino further mentioned his belief that the additional video, data and other intangible assets recovered from the recent 2010 expedition to the Titanic adds additional value to the Company. Mr. Davino further stated he believes the Company’s status as exclusive salvor-in-possession of the Titanic wreck site, including the right to recover additional artifacts in the future, adds additional value to the Company.  Mr. Davino and the Company want to underscore that these values are based on appraisals and estimations of fair values that may or may not be realizable to the Company at any given time, particularly in light of the fact the Company does not have title to all the recovered artifacts. Any future disposition of these assets could be subject to covenants and restrictions which could be imposed by the court. Mr. Davino and the Company further wish to clarify that the Company is not engaged in any discussions with any third-parties regarding the sale of any of these assets.

 

Finally, on the conference call, the Company identified S2BN as the party with whom, in the first quarter of fiscal year 2011, it executed a joint venture to develop new content. The Company indicated that entertainment promoter Michael Cohl is Chairman and Chief Executive Officer of S2BN. 

 

[OracleofCarolina]

The transcript of the call is posted on seeking alpha, there

are other interesting tidbits covered in the call

[onyx1]

Is anyone else involved in PRXI? 

 

I bought a year and a half ago as an inflation hedge.  As luck would have it, it has now more than doubled based on the catalyst of an April 2012 auction of the Titanic artifacts and significant intangible assets.  Bids need to be submitted by Monday April 2, and the winning bidder will be announced mid-April.

 

The stock has reached a level that I consider fair value and normally I would sell.  But I don't think it is right to sell here. Why? Because any entity with the resources to buy the assets (and there are reports of over twenty of them who have expressed serious interest) may also be able to purchase the stock.  If any entity buys the stock at or below their own bid for the assets it would constitute a riskless purchase, with potential upside if another entity buys the assets at a higher price.  I am assuming that at least one bidder is actively purchasing stock in the open market based on this logic, and if so there is no reason to sell. 

 

Can anyone poke a hole in this reasoning such that the best course of action is to simply start selling here? 

 

 

 

 

[OracleofCarolina]

Onyx1,

 

I have been in PRXI for a couple of years.

 

It seems what you are assuming about a bidder buying shares in the open market is taking place.

 

But, what if we are wrong? Like you, i still have shares, but i have gradually been selling this year.

 

I feel bad i left gains on the table but not too bad as I was BAC with my sale proceeds.

 

[ragnarisapirate]

Is anyone else involved in PRXI? 

 

I bought a year and a half ago as an inflation hedge.  As luck would have it, it has now more than doubled based on the catalyst of an April 2012 auction of the Titanic artifacts and significant intangible assets.  Bids need to be submitted by Monday April 2, and the winning bidder will be announced mid-April.

 

The stock has reached a level that I consider fair value and normally I would sell.  But I don't think it is right to sell here. Why? Because any entity with the resources to buy the assets (and there are reports of over twenty of them who have expressed serious interest) may also be able to purchase the stock.  If any entity buys the stock at or below their own bid for the assets it would constitute a riskless purchase, with potential upside if another entity buys the assets at a higher price.  I am assuming that at least one bidder is actively purchasing stock in the open market based on this logic, and if so there is no reason to sell. 

 

Can anyone poke a hole in this reasoning such that the best course of action is to simply start selling here?

 

There has yet to be any 13D filed, so there is one hole... Add to it that there haven't been THAT many shares trading hands, and I would put the theory of a bidder buying the company as being very unlikely. A good idea that would probably do them well, but, unlikely, nonetheless. I say this, because with the resources to buy all the assets, why would it do them any good to buy just 5% of the company? It wouldn't reduce their purchase price THAT much.

 

In the event that they are wanting control, based on the average volume for the last 90 days, even if a single entity would have bought every single share of stock that traded hands for the past 3 months, they still wouldn't control 1/2 of the company. Furthermore, is it likely that the board would let them control a fair bit of the company and make a bid for it without instituting a poison pill to negate the arbitrage? I personally doubt it.

[onyx1]

I have been in PRXI for a couple of years.

 

Nice going Oracle, glad this is working out for you. 

 

We certainly could be wrong here but what would it take for that to be the case? 

 

I guess if none of the entities, or the individuals who work with or are knowledgeable about the bids levels of any entity, decide to take advantage of the gap between market and their bid, then we could have a scenario where the market is too optimistic and bids come in lower.  Or worse, the over optimistic market scares legitimate bidders away entirely.  There are probably several entities who simply cannot buy the stock (e.g. the City of Belfast Ireland, or maybe a museum), but others clear could (Casinos, Disney, asian billionaire, etc.). We only need one to justify our thesis.

 

The market is still implying less than 2007 appraised value so it hard to imagine bidders being scared away at current levels.

 

If we are right, then next week should be very telling.  There is going to be some back and forth with how the high bidder structures the purchase so that tells me that in order to announce on April 15, they will need to inform the non-winners early on.  With knowledge of a losing bid level, what do these entities have to lose by purchasing right up to their bid level prior to the announcement?  I'll be watching closely and my plan for now is to wait until the announcement on April 15.

 

I'm still trying to poke a hole in this strategy though.

 

[onyx1]

There has yet to be any 13D filed, so there is one hole... Add to it that there haven't been THAT many shares trading hands, and I would put the theory of a bidder buying the company as being very unlikely. A good idea that would probably do them well, but, unlikely, nonetheless. I say this, because with the resources to buy all the assets, why would it do them any good to buy just 5% of the company? It wouldn't reduce their purchase price THAT much.

 

Yes, good point, thank you.  I agree that a takeover is not possible since the controlling shareholder has 46% of outstanding.  What is more realistic is that bid-connected entities buy at the margin to reduce their ultimate cost if they win, or make a quick profit if they are not the high bidder.  No 13-D means no entity has accumulated over 2.5mm shares (5%).    Next week will be telling if there is any truth to this thesis or not.  A spike in volume and a 13-D may confirm it.

[infinitee00]

I also bought PRXI about a year or so ago but sold most of it in the last couple of weeks as I didn’t want to lose majority of my  gains on a binary event , especially when I am doubtful the titanic assets would sell for much more than the value assessed ( the buyer has to add the cost of maintenance, insurance,transport etc to the final price). I have kept about 10% of PRXI holding still, just in case they do manage to auction off the Titanic assets at an unexpected premium ( but may sell sooner if the stock goes higher than $4). 

 

I could not find precedence for such an auction with these restrictions (i.e. has to be sold as a collection, need to be open to public).  The big issues for me – even if they sell the titanic assets – is getting approval from the Judge, tax issues on the sale price and final disbursement of the proceeds. I am doubtful whether the buyer would want to buy the Titanic assets and also agree to the conditions set forth by the Judge – agree to keep the collection together and also allow it to be displayed to the public occasionally - while at the same time paying a fortune when the potential for revenues earned on the display may be at risk ( PRXI admits in their latest 10K that revenues from the Titanic exhibitions has been declining). But then again there's enough rich people around who overpay for prized assets, the justification of which is not necessarily based on rationality or economics.

[OracleofCarolina]

Wild day for PRXI, down 18% without any news..should be a crazy week ahead

[JAllen]

Wild day for PRXI, down 18% without any news..should be a crazy week ahead

 

Wow, that's pretty scary, especially the day after the bids were due! (no position)

[eclecticvalue]

Today was definitely scary. I think the drop was due to short term traders who are panic induced. There are two items but not sure if it is related to the drop.

 

1. An insider sold shares- He is a BOD and has horrible timing.

2. SEC granted PRXI to not disclose a reserve amount on the titanic artifacts which is related to the Lincoln park capital agreement. It could be a possibility the drop was related to that.

 

One thing to mention that no one has thought about here and the value blogs. There was a painting that sold for $230 million dollars and it was one painting. Look at the titanic auction, there are thousands of items that are being sold so I think the appraised value of $190 million is being conservative but who knows and we will find out on April 15th.

 

Check this article I found http://www.haaretz.com/news/national/will-eilat-soon-be-the-mecca-of-titanic-tourists-1.420687 I hope this guy steps up.

 

Onyx1- Where did you find out about the twenty bidders?

[onyx1]

Onyx1- Where did you find out about the twenty bidders?

 

Is was referenced in this article.  These were inquiries, not bidders.

 

"Potential buyers include museums, municipalities, research institutions, or even private individuals, Ettinger said. So far, Guernsey's has received about 20 serious inquiries, he added."

 

http://money.cnn.com/2012/03/15/pf/titanic-auction/index.htm