Tuesday, January 31, 2012

The Story of the SS Republic

I had a very busy day today. Not much to say on markets, they continue to have good action under the surface while the indices take a pause. Amazon missing earnings may cause some jitters tomorrow. I made two buys in the late afternoon, will see how it goes.

The long rally of 2012 has some tension building in the finance universe so rather than mix it up there, a totally non market related tale tonight.

The Story of the SS Republic
I am a huge fan of stories of lost ships and treasure. The SS Republic delivers quite a tale.

The ship was built in 1853. Powered by steam engine and propulsion was done by two huge paddle wheels on the sides of the ship. Originally the given name was Tennessee.

Adventure? Check out this list:
-Part of first steamship service between NYC and Central America
-During the California Gold Rush, transported "49'ers" to the eastern shores of Panama and Nicaragua to travel to California's Sierra Nevada mountains
-Transported the last wave of mercenary soldiers in William Walkers rogue take over of Nicaragua, then brought the defeated back home
-Served the Vera Cruz, Mexico to New Orleans shipping lane

Quite a run already, but it gets better.

In New Orleans when the US Civil War broke out, the Confederate navy seized the ship and used it for blockade running. She was re-named the CSS Tennessee in 1861. When the Union forces took over New Orleans the ship was dubbed the USS Tennessee and was pout to use at the Battle of Mobile Bay in 1864.

In March 1865 the old ship was deemed to expensive to refit and was sold at auction. Now given the name SS Republic, the ship was used for the New York to New Orleans travel route from then on.

Gold and Silver Currency for Rebuilding the South
Leaving New York on October 18, 1865 the ship was loaded with passengers as well as a sizable amount of gold and silver coins meant for rebuilding the hard currency base in the south after transfer to New Orleans.

A strong hurricane off Georgia proved too much for the ship, from Wiki:
On the fifth day of her voyage, a hurricane off the coast of Georgia proved too strong for the ship. By evening, her hull was leaking so badly that the fire in the boiler was extinguished, and she stalled in heavy seas, taking on water faster than her crew and passengers could bail her. At 4 pm on October 25, 1865, she sank. The passengers and crew escaped in four lifeboats and a make-shift raft, but 40-foot seas throughout the night made keeping them afloat a serious challenge. It was not until two days later, on October 27 that the survivors, now desperate with thirst, were found by the sailing ship Horace Beals. On October 29, the steamer General Hooker had been sent to look for the Republic, and rendezvoused with Horace Beals. The passengers were transferred and taken to Charleston. Most of the passengers and crew survived, although several were lost on the raft before they could be rescued. All the coins were lost.
And that was that. Or was it?

Rediscovery and Recovery of the Coins
In 2003 the company Odyssey Marine Exploration (OMEX) was able to locate the wreck off Georgia in 1700 feet of water. OMEX uses historical study, side scan sonar arrays, and Bayesian search statistics to locate ships.

The side scan sonar made the two huge paddle wheels very clear to see (its hard in this picture, but it was clear):

The rover robot that OMEX uses to search the ship and recover coins took this picture of one of the wheels:
All told, nearly $75 million dollars in gold and silver coins were recovered at the wreck.

Now that is a tale!

Further reading:
Lost Gold of the Republic - Priit J. Vesilind

Full disclosure: I have a small position in OMEX from years ago that is still "underwater" (pun intended) and thus this tale is not investment advice or trying to get back to even, just find it very interesting.

Have a good night.

12 comments:

David Batista said...

Fascinating! I love stories like these. Makes the imagination run rampant. :)

GawainsGhost said...

Yeah, shipwrecks and lost treasures make for fascinating stories. There are guys who devote their lives to finding them, and that takes a lot of research.

Problem is, depending on where the shipwreck occured, the sovereign state will claim possession. Lost treaures usually end up in a museum.

EconomicDisconnect said...

David, yes ther are great tales. Some of my favorites.

Gawains, thats the issue OMEX is having, many countries want the goods. Only thing is OMEX is only ones that can both find and salvage so countries are striking profit sharing deals with them on recovery.

Emily said...

Hi there! I'm curious where you sourced the image of the SS Republic side-wheel. On the Odyssey Marine Exploration website, there is only a partial view of the wheel, rather than the half-view that you have. Please let me know, or contact me at: emilyz AT beckermayer DOT COM (typed this way to hide out from the Spambots haha)

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treasure Hunter81 said...

Greg Stemm, the co-founder and current CEO of Odyssey Marine Exploration, and John C. Morris, the co-founder of Odyssey Marine Exploration, were both sued by the Securities and Exchange Commission.

It appears that Neptune Minerals is insolvent. Oceanica is extremely unlikely to get an environmental permit. Oceanica’s cofounding shareholder, DNA Ltd, Inc, is tied to a Panamanian entity whose principal members are connected to a number of alleged financial crimes – why did Odyssey Marine Exploration structure it this way?

Isn’t it weird that Odyssey Marine Exploration has been unable to address any of the serious questions posed by concerned shareholders? It’s concerning that John Morris, the founder of Odyssey Marine, is currently being sued by members of Seagrass Recovery. Odyssey Marine Exploration and Neptune Minerals have been tied to brokerage firms with many FINRA sanctions, this is very alarming – would you invest in this company? Buyer beware.

Odyssey Marine Exploration has disappointed 100% of the time on its estimated project recoveries, can you trust anything they say? Why does Odyssey Marine Exploration have opaque and unexplained offshore subsidiaries in the Bahamas and Panama? These are completely unnecessary for Odyssey’s operations.

Based on its current cash reserves and negative cash flow Odyssey Marine Exploration could very well go bankrupt in 2014. Odyssey Marine Exploration was held in contempt of court after it lost the Blackswan case. World-class phosphate mining companies have previously evaluated and passed on the Oceanica asset – Odyssey is the only company interested in this uneconomic asset.

Didn’t Odyssey’s chairman Brad Baker get exposed for signing on both sides of a deal? Why does Odyssey Marine Exploration use an auditor that has been sanctioned multiple times by the Public Company Accounting Oversight Board? Based on accurate historical records, there was never any secret army gold aboard the SS Central America.

It’s alarming that Odyssey Marine Exploration started as a shell purchased by Timothy Brasel, who was later cited by an SEC civil action for stock manipulation. It’s shocking that the predecessor of Odyssey Marine Exploration, Seahawk, went bankrupt – but it’s even more shocking that every other reverse merger treasure hunting company (six in total!) have also gone bankrupt.

It’s alarming that Odyssey Marine Exploration has lost nearly $200,000,000 of shareholder capital while insiders have personally made millions – how much longer can this continue?

Isn’t it ironic that Odyssey Marine Exploration has posted enormous financial losses but CEO Greg Stemm makes enough money to afford five houses for himself and his family? That doesn’t seem fair at all. Why does Odyssey host closed conference calls in which only their investment bankers get to ask questions? Why won’t Odyssey answer questions from other shareholders? Are they hiding something?

http://www.omextruth.com