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Mariusz Skonieczny
Mariusz Skonieczny
Articles (61)  | Author's Website |

Why I Sold Premier Exhibitions

April 05, 2012 | About:

In the January Issue of Ultimate Value Finder, I included Premier Exhibitions as one of three investment ideas. Since then, the stock has more than doubled. However, over the last few days, the stock price declined from $3.75 per share to as low as $2.58 per share. As a result of the sharp price decline, I received several e-mails about whether I am buying, holding, or selling Premier Exhibitions.

I sold my entire position at the end of March for approximately $3.20 per share. The reason why I sold it was because the price ran up so much so quickly that I did not find the risk and reward scenario appealing anymore. I ran the following back-of-the-envelope calculation:

$190 million for artifacts + $100 million for salvage rights = $290 million

$290 million – 10% for auction fees and CEO’s incentive compensation = $261 million

$261 – 30% for taxes = $183 million/48 million shares = $3.80 per share

At $3.20 per share, I faced the following options:

  1. Take $3.20 per share and reinvest in something else, or
  2. Wait for the auction results to get $3.80 per share while facing the possibility of an unsuccessful auction
I chose option number one.

Yes, the Titanic artifacts could sell for much more but I am not in the business of buying undervalued companies and hoping to sell them when they become overvalued. I am in the business of buying extremely undervalued companies and selling them when they become reasonably priced.

About the author:

Mariusz Skonieczny
Mariusz Skonieczny is the founder and president of Classic Value Investors, an investment management firm. He is also the editor of Ultimate Value Finder, a monthly newsletter that features three underfollowed, unknown, and undervalued companies ignored by Wall Street.

Visit Mariusz Skonieczny's Website

Rating: 2.6/5 (11 votes)


AlbertaSunwapta - 5 years ago    Report SPAM
I've done that. And then the odd mistake (a couple value traps but more often than not some accounting fraud) has wiped out my gains because I've introduced a downside bias/risk. Or as Peter Lynch once described it as 'picking the flowers and leaving the weeds.'

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