Photograph by Daniel Ochoa de Olza/AP Photo
UPDATED — Click here for an update to this story via a press release from Meson Capital Partners, LLC. Full updated report is here.
This morning we saw an article in Bloomberg Businessweek highlighting a report released by a Wall Street short seller and investment activist. This report is a damning indictment of the treasure hunting industry, and in particular Odyssey Marine, the well-known treasure hunting company based out of Tampa:

Exploring shipwrecks may provide fun and adventure, but whether it’s a good business is a different question. Perhaps the most well-known treasure hunter, Odyssey Marine Exploration (OMEX), has made headlines for years, including last year when, as my colleague Susan Berfield reported at the time, Odyssey’s brash chief executive officer led the money-losing company in an (ultimately unsuccessful) battle to claim profit from coins found in a Spanish shipwreck. The company’s now in the limelight again, and not in a flattering way. Late last week, a young activist investor published a 66-page report (pdf) outlining an argument for why Odyssey’s stock “is worth $Zero.” The investor, Ryan Morris, alleged the company used offshore entities to obscure its true value, and the company let executives “live a life of glamor hunting the ocean while disappointed investors foot the bill.”

As a team of maritime archaeologists, the treasure hunting industry is of interest to us, and it is antithetical to our goal of preserving and studying shipwrecks for scientific knowledge. We have written about treasure hunting many times before on our blog, including a reaction to the aforementioned incident whereby Odyssey recovered tons of silver from a Spanish wreck (code-named “Black Swan”), and then was forced by the courts to return all of the recovered material to Spain. You can read more of our blogging on treasure hunting here, here, here, and here. The short version of the archaeologists’ argument is this: 1. the methods that treasure hunters use to work a site are destructive and not scientific, systematic, and meticulous like those archaeologists use, and thus result in a significant loss of knowledge that could otherwise be gained by proper excavation techniques; 2. Treasure hunters sell recovered objects, making them inaccessible to both the public and scholars, which results in further loss of knowledge that might otherwise be gained by future research. It has long been known to archaeologists that treasure hunting results in a loss of information about the past; now it seems that stockholders are learning that it can also result in the loss of a financial investment.
Mr. Morris’ perspective, which he is sharing with fellow Odyssey shareholders, is that Odyssey is a terrible investment and that there is no way to fix it, as “in Odyssey’s case, that there’s nothing of value that could be salvaged, even with new leaders.” Businessweek reports that Odyssey’s stock has already fallen 34%. Reading his report, it is easy to see why.
The 66-page, scathing report is available here. If you are at all interested in the debate between archaeology and treasure hunting, its a must-read. It is thoroughly researched and footnoted with internet links and it is no holds barred. Some highlights:

OMEX [Odyssey Marine] was founded by and is currently run by expert stock promoters who have been sued by the SEC
Greg Stemm and John Morris’s previous shipwreck hunting company Seahawk (SHWK: $0.0012) was sued by the SEC. They refused to cooperate with government subpoenas and had a stop order placed on their stock
OMEX executives and directors have received cash compensation over $20mm and have net sold $5mm of stock, shareholders have been diluted 7X and accumulated losses of $180mm.
We believe the purpose of OMEX is to serve as a vehicle for OMEX insiders to live a life of glamor hunting the ocean while disappointed investors foot the bill.

OMEX stock is worth $Zero and if OMEX is unable to raise equity they will be forced to file
bankruptcy within the next 6-12 months

As highlighted by the “Black Swan” debacle, we believe UNESCO’s new regulations to protect national gravesites and heritage make for-profit historic shipwreck hunting unviable.

Though our investigation continues, we are sharing this report with the public and the relevant American and International authorities. We are hopeful regulatory action will be taken in short order and will do our best to assist. Although we are self-admitted capitalists, something strikes us as socially lacking with the concept of digging up tragic historical national graveyards to sell the heirlooms to the highest bidder

There have been 7 public companies with almost identical business models as OMEX, the stocks of which all are now worthless or nearly worthless. We believe that OMEX’s functional business model is to create fantastic stories to part a steady stream of beguiled investors from their money to finance insider’s glamorous adventures. Shareholders have footed the bill, accumulating losses of $185mm as OMEX [Odyssey Marine] insiders Greg Stemm, John Morris and other insiders have enjoyed their charmed life of treasure hunting. Insiders have collectively received over $20mm of cash compensation since 2000 while personally net selling $5mm of stock to less informed public investors

Click here to peruse the full report.