We’ve been tortured by this company, Premier Exhibitions (PRXI) for many years. The company is in the business of large scale exhibitions, for which they charge admission– such as human skeletons, or, on a very different note, the Saturday Night Live exhibition currently showing in New York City. But the exhibition business has not profitable for the company in recent years, and all the real value is in the artifacts and intellectual property associated with one particular exhibition – the Titanic. Premier was involved in the salvage efforts for the Titanic, the most famous shipwreck in history, and thousands of objects were recovered – plates, glasses, pieces of the ship.
Most recently, these 5,000 artifacts were independently appraised at $218 million: “The current appraisal does not include the value of intellectual property and archaeological assets compiled during the company’s 2010 dive, including the first comprehensive survey map of the wreck site, photomosaics, sidescan sonar and 3D imagery.”
PRXI has been trying to sell its Titanic assets for years, and has missed the best opportunity, prior to the 100th anniversary of the sinking in 2012. The sale has been hindered in large part because the court which awarded the company the assets also imposed certain requirements, such as keeping the collection together and making it viewable to the public. So the collection cannot be auctioned off piecemeal, and it cannot be sold to a reclusive billionaire who would keep it in his private vaults, as so much artwork is kept.
Most assessments of the value of the company ascribe nothing to the operating business, although it probably has some value. But the entire market value of PRXI is, as of April 24, 2014, $24 million. So a company with a real ongoing operating business and with an asset of appraised at over $200 million, is valued, in total, at 11% of the value of its largest asset.
One would have to assume that the Titanic assets are not really worth $218 million, or anything close to that. After all, an asset is, in the final analysis, worth only what it can actually be sold for, and the company has failed to find a buyer. But given that a single famous art work can sell for over $100 million, it seems strange that the thousands of artifacts from the Titanic, the most famous ship of all time, and all the associated intellectual property from the salvage operation would be worth a great deal, or at least a great deal more than the company’s current market value.
So the company is either a great investment for patient investors, or a value trap, as it has been for many over the last several years.
If the company has failed in the last several years to turn around its operating business, or to sell the Titanic assets, then one must ask what is the catalyst for change? In fact, one such catalyst recently appeared. The finance guy who had been trying for years to turn around the company, Mark Sellers, has finally seen the light, and realized that he simply does not have the background and experience to run an exhibitions company, and so he has merged PRXI with a company that is actually in the exhibitions business, and handed the reins of the combined company to Daoping Bao, Founder and CEO of Dinoking. So there is new blood and a new infusion of cash to provide a lifeline to this floundering company. The bad news is that it is very difficult to find any information about Dinoking or Daoping Bao. Dinoking, as the name implies, runs exhibits based on dinosaurs, and is apparently a profitable, though small, company, with most of its exhibitions in Canada.
If you would like more information on the PRXI story, and an unusually frank admissions from its current CEO, then read this transcript of a recent investor call with the company.
The bottom line is if the Titanic assets can be sold, the company is probably worth far more than its current valuation. If not, then not. This investment has a lot of upside, with risk of total loss, so don’t invest more than you can comfortably afford to lose.
Disclaimer: The Publisher of Attitude Media is long PRXI