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Sold more shares of Premier Exhibition (PRXI) yesterday

April 3, 2012

I’ve now reduced my position to 1/3 of my original holdings. Unfortunately I didn’t take advantage of the spike up in price last Wednesday and Thursday to sell shares; I calculated, wrongly, that the spike would take place Friday, the day before the auction closed. I was being a little too cute for my own good. As it is, I’ve now sold 2/3 of my shares at an average price of $3.48, a not unhealthy return. I’m becoming less and less enamoured of holding my remaining shares in PRXI until the outcome of the auction is made public, but with the share price falling off sharply this week, it looks like that’s what I’ll be doing.

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From → Positions Closed

7 Comments
  1. Pete permalink

    Any speculation as to why the shares are getting smoked?

  2. Sorry Pete wish I knew. Maybe somebody has inside info that no qualified bid was received or that the highest bid was well below the appraised value. Of course, it could just be cold feet and the market feeding on itself. We’ll find out soon enough.

    Thanks for the comment

  3. Pete permalink

    Would like to believe that this is merely a shaking-out of the weak momentum hands that have been piling into the stock over the last month when it was setting new highs every day. Then again, the timing is suspicious and a bit unsettling. You’d have to imagine that the auction house is bound by a confidentiality agreement, and you also know that Sellers can’t be trading on non-public information. In any event, this is in the court’s hands now…

  4. Ryan V permalink

    Great timing Jay!

  5. GlennC permalink

    1a- Perhaps they weren’t seeing a lot of interest in the Titanic assets? Going in, the bidders (and PRXI) have to have known that bidding on the assets is a complicated process. They have to buy all of the assets, not pieces of it. And they have to take care of the historic assets (as mandated by the court). So their explanation for the delay may be a little fishy?

    1b- It is a sketchy auction if it is extended. If an eBay auction was extended and I was the winning bidder… I would be really pissed. If I had the lowest bid on the Titanic artifacts and there was no reserve price… I would file a lawsuit against the auction house. This suggests to me that the reserve price was not met. Otherwise this will likely be an extremely controversial auction… and I doubt an auction house will take that reputational hit.

    2- I never figured this out: what happens to the Titanic exhibition once they sell the assets? Does Premier still get to exhibit the Big Piece? And if so, would you still pay so much for the Titanic artifacts if you didn’t get to exhibit the star artifact yourself?

    How does it all fit in in terms of Premier’s operating business? I am not an expert on auctions or historic artifacts so I stayed away from this.

    • Glenn,
      I tend to agree with most everything you said. The auction process was difficult, the delay in reporting results is not positive and what is left of the business once the Titanic assets are sold is not clear. From the major shareholder’s (Sellers) point of view, however, the auction may have been the only way to realize value, and it was probably better to control the auction process than have it under court supervision.
      From my perspective, I’m rather pleased that I was able to get a 100% return on 2/3 of my position. Let’s see if, with the auction results, I’m able to exit with little harm on the last 1/3.
      After all, we’re in this for the return, no? not whether the company is managed well or not.

      • GlennC permalink

        I am guessing that it makes sense for them to auction the artifacts, given that the operating business has negative cash flow before capex. In other words the operating business does not make money and should probably be liquidated.

        I think management does matter to some degree. It was the original management that seemed to generate very high returns on invested capital, because the guy actually knew how to run successful exhibits. This seems like a business with low barriers of entry and where returns depend highly on management. (Unfortunately the original management did not treat shareholders very well.) Or if you look at Contango Oil & Gas (another stock Sellers has owned), management has clearly made a difference. They have been able to generate high returns on invested capital and shareholders have greatly benefited.

        Congratulations on doubling your 2/3 investment. I guess I missed this party as I didn’t buy a single share. Good luck with the last 1/3. Part of me wants to short this stock but that’s probably not the world’s greatest idea, especially as I have not done due diligence (e.g. contact the auction house, figure out what the terms are). Apparently the buyer has to put these artifacts up for public exhibition… this may affect its value a lot.

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