Ultimatevaluefinder sampleissue

1UltimateVALUEFINDER|MARCH2013
Dear Valued Readers,
In the March 2013 issue of the Ultimate Value
Finder, I cover three very different companies:
Aurcana Corporation, which is a victim of the
recent industry’s sell off; Marchex, which is just
crazy how cheap it is; and Premier Exhibitions,
which is being sold off because shareholders are
exhausted again.
INVESTMENT SUMMARY
When I started Classic Value Investors,
the financial markets were collapsing.
During the last few months of 2008, I
was sitting at my job at a commercial
real estate brokerage company, and I
walked into my boss’s office and I said,
I am quitting. I said I was starting
an investment firm because this was
the time to invest. At that time, I was
screaming to all my friends and family
about all the investment opportunities
that I saw. Did anyone listen? Yes, they
but did anyone do anything about it?
No, not even a single person became
my client. Long story short, I was up
360 percent in 2009 on my personal
account. I received my first client in
the middle of 2009, but this was after
AURCANA CORPORATION (AUN, AUNFF)
CONSIDERED TOXIC LIKE ALL THE MINERS
Mariusz Skonieczny
1 Editor’s Comments
1 Aurcana Corporation -
Considered Toxic with
All the Mining Stocks
8 Marchex -
I Cannot Believe This
Opportunity Exists

16 Premier Exhibitions -
Ok, Let’s Do It Again
CONTENTS

Ultimate VALUE FINDER | MARCH 20132
I was already up by more than 100
percent.
Now, I am SCREAMING again. I can’t
make it any louder. THE MINING
STOCKS ARE SO CHEAP YOU HAVE TO
STOP SUCKING ON YOUR THUMB AND
LOOK AT THEM. They are so cheap and
so hated we haven’t seen these kinds
of opportunities in the mining sector
since 1992. If we get returns that
are anything close to what happened
between 1992 and 1996, some people
will make fortunes. The following is
a quote from a recent interview with
Rick Rule from Sprott Global Resource
Investments.
“My net worth is a consequence at
having the courage to buy markets
like 1992 and 1999 very, very, very
aggressively … from the bottom of
1991 to top in 1996, in terms of my
own portfolio, in 1996, I paid more in
capital gains tax than my net worth
was in 1992. That’s the type of wealth
that can be created by aggressive
speculators in what are regarded by
the public as toxic markets. These are
opportunities. These are not times of
terror for people who think.”
To listen to Rick Rule’s interview, click
the following link.
h t t p : / / w w w . k i n g w o r l d n e w s .
com/kingworldnews/Broadcast/
Entries/2013/2/28_Rick_Rule.html
This brings me to Aurcana Corporation,
which is cheap. No, it is not as cheap as
Veris Gold or Monument Mining. Nothing
is as cheap as Veris or Monument, but
I can’t be writing about these two in
every issue of the newsletter, which
I really should. I bought Aurcana a
couple of years ago and the market
cap was about $300 million. At that
point, the company was producing
about 1 million ounces of silver from
one of its mines. Fast forward to today
and Aurcana is producing at a run rate
of 5 million ounces of silver equivalent
per year. This is a significant increase,
don’t you think? Well, this is why I was
buying it. The company was expanding
one of its mines and was putting a
brand new mine into production.
Even though the management has been
extremely successful at executing, the
stock price is pretty much at the same
level as what I paid for it. In other
words, you are getting a 5-million-
ounce producer for the price that I had
to pay for a 1-million-ounce producer.
But, the story does not end here. The
second mine that the company put into
production just went into commercial
production in December 2012. It is
not operating at full capacity. In about
12 to 15 months, Aurcana will be a
10-million-ounce producer when the
production ramps up. How is it possible
for the price to be so cheap? Well, if
the sellers think that mining companies
in general are toxic investments, then
yeah, you can get it for this price.
COMPANY’S DESCRIPTION
Aurcana Corporation is a Canadian
junior mining company listed on the
TSX Venture Exchange, symbol AUN,
and US Pink Sheets, symbol AUNFF.
The company just announced a future
reverse split to uplist on a higher
exchange. Many investors are throwing
a fit about this reverse split.
The principal business of the company
is the acquisition, exploration,
production, and development of
mineral properties, primarily silver-

copper-zinc-lead mines. Since 2007,
the company has been operating La
Negra Mine, in which it holds a 99.9
percent interest. La Negra Mine is in the
state of Queretaro, Mexico. In addition,
in 2008, the company purchased a
100 percent interest in Shafter Mine
in Texas, USA. In December 2012,
the company announced commercial
production at Shafter Mine.
La Negra Mine
The La Negra silver-copper-lead-zinc
mine is located in the state of Queretaro,
Mexico. The mine was discovered and
developed by Industriales Penoles
S.A. de C.V. and it was in production
from 1970 until 2000. Historically, it
produced 36 million ounces of silver,
323 million pounds of zinc, 70 million
pounds of copper, and 161 million
pounds of lead. Aurcana acquired La
Negra Mine in 2006.
Shafter Mine
Shafter Mine is a silver mine in Presidio
County, Southwest Texas. From the late
1800s to 1942, it produced more than
35 million ounces of silver. In April 2012,
Shafter was put into production two
months ahead of schedule and under
budget. In December 2012, Shafter
was put into commercial production at
a rate of 600 tons per day. Currently,
it is in the ramp-up phase and should
be operating at 1,500 tons per day
by the third quarter 2013 (I am sure
something will delay it as it always
does with the miners).
AURCANA’S PROGRESSION
Aurcana Corporation is truly one of the
most remarkable turnaround stories in
the mining sector. In 2008, under the
previous management, Aurcana was
not able to operate profitably. It was
on the brink of bankruptcy. The board
of directors was dissatisfied, fired
the previous CEO, and asked Lenic
Rodriguez, who at that time was one
of Aurcana’s shareholders and board
members, to turn the company around.
Since he took over on May 19, 2009,
positive things have started to happen.
The company became profitable while
continuing to increase production.
The following is Aurcana’s progression
since I got involved in the company.

When I acquired Aurcana (Point A),
the company was only producing silver
from one of its projects, La Negra
Mine. Because the plant capacity was
only 1,000 TPD (tonnes per day),
the company was only marginally
profitable, producing approximately 1
million ounces of silver. By July 2010,
the company expanded La Negra’s
capacity to 1,500 TPD. By March 2012,
the company expanded La Negra’s
capacity to 2,000 TPD. By April 2012,
the company expanded it again to
2,500 TPD. Today, La Negra is almost
operating at 3,000 TPD and producing
approximately 3 million ounces of
silver, which is significantly higher than
the 1 million it was at when I bought it.
InApril2012,thecompanyputitssecond
mine, Shafter Mine, into production.
This was a very big accomplishment.
In December 2012, the company
announced that Shafter Mine had
reached commercial production at a
rate of 600 TPD. This was another big
accomplishment. Because December is
the last month of the year, production
from Shafter is not really showing up in
the financials yet.
What is next?
The next step that the company is
planning to achieve is to expand
La Negra Mine to 3,000 TPD and
ramp up Shafter Mine to 1,500 TPD.
This should happen in 2013. At that
point, the company will be producing
approximately 7 million ounces of silver
per year.
As of the date of this report, La Negra is
pretty much at 3,000 TPD and Shafter
is at about 900 TPD. Based on this, the
current production run rate is about 5
million ounces of silver. The company
estimates that next quarter, Shafter
will be at 1,200 TPD and the following
quarter at 1,500 TPD. When Shafter
reaches 1,500 TPD, Aurcana will be a
7-million-ounce producer.
Then, when Shafter reaches 1,500
TPD, the company will immediately
start the expansion towards 2,500 TPD.
The estimate is that from 1,500 TPD,
it should take about a quarter to reach
2,000 TPD and another quarter to reach
2,500 TPD. So, in total, it should take
about 12 months for Shafter to go from
900 TPD to 2,500 TPD.
With La Negra operating at 3,000 TPD
(it already is there) and Shafter at
2,500 TPD, Aurcana will be a 10-million-
ounce producer. It will have made the
transition from being a junior miner
when I bought it to a senior miner.
As a senior miner, it will not only be
generating lots of cash flow, it will also
attract institutional investors who will
reprice the stock significantly.
VALUATION
A few days ago, Aurcana’s market cap
was approaching $300 million after
being crushed almost 50 percent from
its high. As I am typing this paragraph
on Sunday, February 24, 2013, the stock
has recovered a bit and now, the market
cap is about $350 million. I am just
going to stick with the 300-something
market cap because I can’t keep up
with the market seesawing this thing
day in and day out. Who knows where
it is going to be by the time I wake up
on Monday.
To value Aurcana, let’s look at it from
two angles. One, let’s compare it to
other silver producers, and two, let’s
estimate the kind of cash flow that the

company can generate based on the
current silver production and future
silver production.
As I mentioned before, Aurcana’s
production is at a run rate of 5 million
silver equivalent ounces.
Comparable Company Number 1:
Fortuna Silver Mines
Fortuna Silver Mines is silver producer
with two low-cost operating mines
and landholdings of more than 87,000
hectares in Peru and Mexico. Fortuna
produces about 5 million ounces of
silver per year. The market cap is slightly
more than $500 million. Aurcana’s
current run rate is also 5 million ounces
per year while its market cap is closer
to $300 million. While Fortuna is also
a growing company, it doesn’t have
the same growth potential. Aurcana is
on its way to becoming a 10-million-
ounce producer. Don’t you think it
should have a higher market cap than
Fortuna? I think so.
Comparable Company Number 2:
Endeavour Silver Corporation
Endeavour Silver Corporation is a mid-
tier silver mining company in Mexico.
Currently, the company has three
producing mines and five exploration
projects. In 2012, Endeavour’s silver
production was 6.4 million ounces.
The current market cap is almost $600
million but this is because Mr. Market
has had its emotional breakdown when
it comes to the miners. In September
2012, Endeavour’s market cap was
$1 billion. While Endeavour’s current
production is higher than Aurcana’s,
it doesn’t have the same growth
potential. When Aurcana reaches a
10-million-ounce-production mark, it
should surpass Endeavour’s valuation
pretty quickly.
Comparable Company Number 3: First
Majestic Silver Corporation
First Majestic Silver Corporation is a
silver-producing mining company with
a portfolio of projects focused on silver
in Mexico. First Majestic produces
approximately 9 million ounces of silver
and has a market cap of $2 billion.
While First Majestic’s goal is to produce
16 million ounces by the end of 2014,
its valuation just gives you an idea of
where Aurcana’s valuation can be once
it achieves its 10-million-ounce silver
production target.
Comparable Company Number 4: Hecla
Mining Company
Hecla Mining Company is a silver
producer in the U.S., with exploration
properties and operating mines in four
world-class silver mining districts in
the U.S. and Mexico. Hecla produces
approximately 11 million ounces of
silver per year and has a market cap of
$1.3 billion. Just a few months ago, the
market cap was $2 billion, but this was
before Mr. Market went crazy.
All of these comparable companies
have higher valuations than Aurcana
even after the recent meltdown in
the mining sector. Yes, they are all
different. Some have more growth
potential than others. Some have more
projects or resources than others.
There is no single silver producer
identical to another silver producer.
I just wanted to show you what kind
of valuations Aurcana can get once it
reaches its production target. Actually,
Aurcana should already be revalued
based on the current production rate
of 5 million ounces. However, the

problem is that the current production
is a run rate production meaning that
it is not showing up in the financials
yet because financials are backward-
looking. In 2012, Aurcana produced
only 2.5 million ounces of silver. This
is significantly less than the current
5-million-ounce production rate.
However, this is because Shafter Mine
was barely producing anything in 2012
and also La Negra was being expanded.
Shafter was put into commercial
production in December 2012, which
means that the bulk of its production
will show up in the 2013 and 2014
financial statements.
The following is the income statement
and balance sheet (next page) of
Aurcana.
As you can see, these financials are not
very meaningful because they show
that Aurcana is not very profitable.
Actually, what they show is that
Aurcana has not been very profitable
in the past. Of course Aurcana has not
been very profitable in the past – it was
a turnaround in the making. Here is a
good illustration of the turnaround.
Now, with La Negra’s capacity at 3,000
TPD and Shafter ramping up to 1,500
TPD and then to 2,500 TPD, the magic
will start happening.

Current Production of 5 million ounces
Based on the current production of 5
million ounces per year, the company
should generate the following cash
flows from mining operations.
As you can see, if the price of silver
stays around $30 per ounce, Aurcana
can generate $100 million of cash flow
from mining operations. Notice that
cash flow from mining operations is
not the ultimate bottom line. It does
not include general and administrative.
With that being said, mining companies
usually trade at some kind of multiple
of mining cash flows. Obviously, the
magnitude of the multiple depends on
the future growth.
Now that we know that Aurcana’s
current earning power is $100 million of
mining cash flows, what kind of multiple
can we assign it? Well, the market is
assigning it a multiple of about 3. Is
this reasonable considering Aurcana is
on track to grow its production to 10
million? I don’t think so. I believe that
the multiple should be at least between
6 and 8. Consequently, Aurcana should
be trading for between $600 and $800
million today.
Future Production of 10 million ounces
Based on the future production of 10
million ounces, the company should
generate the following cash flows from
mining operations.
As you can see, if the price of silver
stays around $30 per ounce, Aurcana
can generate $200 million of cash flows
from mining operations. By that time,
the market cap should be higher than
$1 billion.
Obviously, the current and future
cash flows will depend on the price of
silver. I will not be discussing silver in
this report, but investing in Aurcana
makes the most sense for investors
who believe that silver prices are either
going to stay at the current price levels
or increase in the future. I believe that it
will increase because of the continuous
money printing by our government,
but at this point, I am in the minority.
Everybody else seems to believe that
our economy is improving and that the
Fed will stop with its QE experiment.

CONCLUSION
Aurcana went from almost going
bankrupt, to being a profitable junior
mining company, to being a mid-tier
mining company. It is now on track
to being a senior mining company.
Even though the current CEO saved
the company and turned it into what
it is today, he is still down on his
investment. In order for him to break
even, the stock has to double from the
current levels. And, I can tell you that
he is not just interested in breaking
even. He is set on making Aurcana one
of the major silver mining companies
and making a killing on his investment.
Disclosure: I, or persons whose
accounts I manage, own shares
of Aurcana Corporation. This
report is not a solicitation to buy
or sell securities. Neither Mariusz
Skonieczny nor Classic Value
Investors, LLC, is responsible
for any losses resulting from
purchasing or disposing shares
of Aurcana Corporation. You are
advised to consult your financial
advisor or conduct the due diligence
yourself.

MARCHEX, INC. (MCHX) -
I CANNOT BELIEVE THIS OPPORTUNITY
IS STILL AVAILABLE
INVESTMENT SUMMARY
As an investor in the stock market, you
have the ability to invest in companies of
all sizes. However, most investors prefer
to invest in large cap companies because
Wall Street successfully persuaded them
that small companies are risky. As a
result of this, the kind of mispricing that
can be found in the small cap space
can be jaw-dropping. For this reason, I
focus on these kinds of companies when
writing ideas for Ultimate Value Finder.
Marchex is the kind of investment
opportunity that makes you want to
say, “Is this for real? What is Mr. Market
thinking?” Marchex is a company that
has two separate business segments.
One of the segments is growing fast and
has a tremendous future. The second
business segment is profitable, but due
to the growth of the first business, was
neglected until now.
To unlock value, the management has
decided to separate these two business
segments through a tax-free spinoff.
The first business will continue to be
run in the same fashion, but the second
business will get its own management
team that will focus on growing and
developing it. When you look closely at
each of these businesses, it is obvious
that the combined value is more than the
company’s current market capitalization.
Actually, the value of second business,
which is being spun out, is probably more
than the company’s current market cap,
which means that you are essentially
getting the first business for free. And,
it is really the first business that is the
crown jewel.
COMPANY’S HISTORY
Marchex was founded by Russ Horowitz
and three other executives who
successfully built another company
called Go2Net, which they sold at the
peak of the Nasdaq bubble to InfoSpace
for $1.5 billion. Actually, Go2Net merged
with InfoSpace, but the transaction was
valued at $1.5 billion.
The founders of Marchex

Upon the merger with InfoSpace, they all
joined the newly formed company. Little
did they know that they were joining
forces with one of the biggest con men
of the Internet bubble days. Naveen Jain
was the founder of InfoSpace, which
was nothing but a big illusion of success
created by lies and deception. At one
point, Wall Street was in love with Jain
and his company, pricing InfoSpace
higher than Boeing. To hide the behind-
the-scenes problems of InfoSpace, Jain
engaged in all kinds of shenanigans such
as creative accounting and dubious deals.
The merger with Go2Net was one of his
ways of covering the revenue shortfalls
of InfoSpace.
After Horowitz and his team joined
InfoSpace upon the merger, they soon
learned how dire the situation was under
Jain’s leadership. Long story short, Wall
Street woke up to what was going on,
the stock price collapsed, and investors
and employees lost a lot of money. After
realizing that the situation was hopeless,
Horowitz and his team left InfoSpace
and began their search to start another
company.
MARCHEX IS BORN
Because of their previous success with
building Go2Net, they did not have
much trouble raising money for another
company. In 2003, they raised $20
million and used this money to acquire
two companies which would form the
basis for Marchex. Then, in 2004, the
company held an IPO through which it
raised an additional $27 million, which
was used to buy more companies. Unlike
other technology companies, Marchex
was not about innovation but about
identifying underperforming assets and
acquiring them on the cheap.
MARCHEX PROGRESSION
In some ways, companies are like people
meaning that they change and evolve
over time. When Marchex was started
the company was focused on connecting
businesses to potential customers mainly
through the Internet. In other words,
Marchex was the middleman between
clients and businesses.
To accomplish this, Marchex acquired
various businesses that would enable the
company to make these connections. For
example, Marchex acquired more than
200,000 domain names with addresses
such as Beijing.com, Corporations.
com, Cuisine.com, and Remodeling.
com. Because these domain names were
generating millions of visitors, Marchex
was able to funnel them to various
businesses and be paid advertising fees.
Clients usually paid Marchex fees based
on performance meaning that they paid
a certain rate per click.
To build its network of domain names
and other advertising services, Marchex
acquired a handful of companies.
But one particular acquisition was so
instrumental that it completely changed
the company’s business model. That
acquisition was VoiceStar, and Marchex
acquired it on September 29, 2007, for
$28 million.
VoiceStar was one of the largest providers
of call-based advertising services
including pay-per-call and call-tracking.
Pay-per-call is a way for advertisers to
market their products or services and
only pay when a potential customer calls
them. Call-tracking is a way to analyze
phone calls in ways such as how often
they convert into final sales.
At first, it wasn’t apparent that call-
based advertising was going to be a
winner, but in 2009, it took off. It was

so successful that the company basically
stopped focusing on other parts of the
business and concentrated on building
call-based advertising. Today, call-based
advertising generates more than 80
percent of its revenues.
COMPANY DESCRIPTION
Marchex has evolved into an advertising
company that helps businesses reach
their potential clients. To achieve this,
the company offers performance-based
digital call advertising and non-call
advertising.
Digital Call Advertising
Digital call advertising is the company’s
main business which, as mentioned
before, was born out of the VoiceStar
acquisition. To provide digital call
advertising, the company offers two
products: Marchex Call Marketplace and
Marchex Call Analytics.
Through Marchex Call Marketplace,
clients are able to reach potential
customers and only pay for advertising
when they actually receive phone calls.
Here is how it works.
Step Number 1: Potential client
searches on the mobile device for a
particular product or service.
Step Number 2: Various results are
generated on the mobile device.
Step Number 3: Potential client calls
the business that fits his or her search
criteria.
Marchex Call Analytics is a technology
platform that measures and analyzes
phone calls.
This platform helps advertisers get
data and insights needed to accurately
measure advertising performance,
including the number and type of calls
driven from mobile, online and offline ad
campaigns. The idea behind this product
is to help advertisers make more informed
ad campaign optimization decisions to
drive quality customer phone calls and
maximize their return on investment.
Why is Digital Call Advertising Successful?
If you have ever run a business, you
know very well that getting clients is
key to generating revenues. With no
clients, you have no business no matter
how good you are. To get clients, most
businesses have to do some kind of
advertising. However, the problem with
advertising is that in many instances, it
does not generate meaningful results. For
example, I used to run a ballroom dance
company where we taught people how to
dance. We ran a phone book ad that cost
$3,000 for one year. You know what we
got in return? Five phone calls. I kid you
not. If you do the math, we paid $600
per phone call and you know very well
that a phone call does not necessarily
mean a new client. After one year of this
rip-off, we stopped advertising.
There are thousands and thousands
of business owners out there who are
not happy with the return on their
advertising dollars. They are willing
to pay for advertising as long as it

generates meaningful results and this
is where performance-based advertising
comes in. This is exactly why digital call
advertising has been so successful over
the last several years – businesses are
desperate for a pay-for-call advertising
model. They want and need to receive
informational phone calls from potential
clients, but they don’t want to pay for
advertising that doesn’t deliver results.
With the invention and acceptance
of smartphones, the world changed
because smartphones allowed people to
search the Internet without the need of
a desktop computer. While you realize
that searching on the phone is a little
different than searching on a desktop
computer, you might not realize that
mobile searching is more important
for advertisers. When people search
on their desktop computers, they are
more likely to do a lot of clicking and
visiting websites. Because the screens
on smartphones are so tiny, Internet
browsing is cumbersome. Consequently,
people are more likely to call the
businesses to find out what they want
and phone calls are much more valuable
to advertisers than clicks. Because of
the human contact, phone calls have a
conversion rate 10 times greater than
the rate generated by clicks. These
dynamics are understandable because if
someone calls me about ballroom dance
lessons, I can explain things better and
most importantly I can use my sales skills
to convince them to sign up for lessons.
Non-Call Advertising
While digital call advertising is the main
business, Marchex provides non-call
advertising products and services. Non-
call advertising is what Marchex was all
about before the VoiceStar acquisition
which transformed the company and took
it into a completely different direction.
Non-call advertising products and
services include pay-per-click advertising
and proprietary website traffic (people
typing in website addresses directly into
the browser) from the 200,000 domain
names that the company owns. Similar
to pay-for-call advertising services, pay-
per-click advertising services are all
about performance-based advertising,
meaning that advertisers pay a fee when
someone clicks on their advertisements.
To provide pay-per-click advertising
services, Marchex built a distribution
network that gets lots of Internet traffic.
This distribution network consists of
website publishers, distribution partners
(Google, Yahoo, etc.), and more 200,000
domain names. When a particular ad
is clicked on by an Internet user, the
owner of the ad pays a fee. This fee is
split between Marchex and the website
publisher or distribution partner. If the
Internet user clicks on a the ad located
on a Marchex-owned domain, the entire
fee goes to Marchex.
SPINOFF TO UNLOCK VALUE
When you listen to the company’s
conference calls, you will hear the CEO
say that if you add up the values of
the company’s assets, which include
the digital call advertising business
and 200,000 domain names, the
company is undervalued. Because of this
undervaluation, the insiders are buying
the stock for their personal accounts and
the company itself is buying shares.
To unlock value, the management
decided to separate its two businesses
into two distinct, publicly-traded entities:
Marchex and Archeo. Marchex will be a
pure play mobile advertising company
and Archeo will include the non-call
advertising business with more than
200,000 domains. For more information
about Archeo, visit www.marchex.com/

archeo. Archeo shares will be distributed
to existing Marchex shareholders on a
pro rata basis.
Marchex will continue to be run by the
same management and the focus will be
on digital call advertising which is still
relatively new. Most businesses are not
even aware that there such a thing as
pay-for-call advertising.
Archeo will be run by a completely
different management team that
will focus on growing this business.
As mentioned before, the non-call
advertising business has been neglected
because Marchex was mainly focused on
its fast-growing digital call advertising.
With the new management team, Archeo
has the potential to deliver superior value
to shareholders.
Currently, the non-call advertising
business mainly comprises more than
200,000 domain names such as Beijing.
com, Corporations.com, Cuisine.com,
and Remodeling.com. The domain
inventory also includes more than 75,000
U.S. ZIP code sites, including 98102.com
and 90210.com.
If you visit some of these websites,
you will notice that they are not really
developed to their full potential. On
the next page are the screenshots of
Remodeling.com and Cuisine.com.
As you can see, these two websites
have the same layout with some kind of
picture in the middle and various links
around it. If you click on some of these
links, you get various advertisements.
When people click on these
advertisements, Marchex gets paid a fee
by the advertiser.
The goal for Archeo will be to sell off some
of these domains, selectively develop
some of them, and opportunistically buy
other domain names to grow the pay-
per-click business.
In real estate terms, these domain names
are like parking lots. They generate
revenues, but when they are developed
with buildings, they will generate more
revenues. But developing these domains
requires resources and focus because
websites don’t develop themselves. The
reason why the company is planning to
selectively develop some of the domains
is because it is not cost effective to
develop them all. In certain instances, it
is better to sell them to someone else or
just keep them as parking lots.

VALUATION
The following is Marchex’s income
statement and balance sheet.

Currently, Marchex has a market cap
of about $140 million. As of September
30, 2012, the company had $35 million
in cash so the enterprise value is $105
million. Let’s see what we get for this.
Non-Call Advertising Business (Archeo)
Let’s first start with the non-call
advertising business which is in the
process of being spun out. This business
mainly includes over 200,000 domains.
What are they worth? We don’t know
exactly but we can get an idea.
In February 2005, Marchex acquired
more than 100,000 domain names from
Name Development. The price that the
company paid was $164 million. Notice
that this is just for 100,000 domains.
Before the acquisition, Marchex already
owned 100,000 domain names. If we
use this transaction as a comparable,
we can conclude that these domains
are worth about $300 million. Let’s not
forget that the enterprise value is only
$105 million, which means that the
domain names alone could be worth
three times as much as the price tag of
the company and we didn’t even get to
the call advertising business. But let’s
not get ahead of ourselves here because
just because the company paid a certain
amount to acquire domain names does
not mean that they are worth this much.
It is not uncommon for companies to
overpay for acquisitions.
Let’s look at it another way. When I
looked through the company’s domain
names, I was particularly interested
in one domain: Salsa.com. I like Latin
dancing and I thought it would be cool
to own this domain. So, I went to this
domain name and clicked “This domain
may be for sale. Click here for more
information.” This is the page that I got.

Notice two things. One is the price ranges
that Marchex wants possible buyers
to check and second is the statement
saying that most generic domain names
sell for a minimum of $50,000. I filled
out my information and said that I am
interested in buying this domain, and
here is the e-mail that I received.
“Thanks for your interest in the domain
Salsa. I wanted to personally follow up
with you on your inquiry.
Domains similar to this domain have
sold in the 6 figure range. Do you mind
me asking what your budget is for this
domain? We receive many inquiries a
day for our domains so it’s important to
us to verify if we can meet your pricing
expectations prior to initiating the
appraisal and sales processes.
I look forward to hearing back from you.”
There is absolutely no way in the world
that I would pay 6 figures for this domain,
but this is how much some people are
willing to pay to get prime digital real
estate. The way I responded to this
e-mail is the following.
“If domains like this sell in the range of 6
figures, we can just stop our conversation
here. It is not even close to what I am
willing to pay. The top I would pay is
$2,000.”
Obviously, there is no chance that I
can get this domain for $2,000. But for
illustration purposes, let’s say that the
company could get $2,000 on average
for domain names that they own. This
translates into $400 million ($2,000 x
200,000 domains). This is about four
times the current price tag of Marchex.
Let’s look at the valuation in another way.
Over the last several years, Marchex sold
about 5 percent of its domain names
to people who contacted the company
the same way I did, meaning that they
visited the website and saw that it was for
sale. The company received $30 million
for less than 5 percent of its domains
and the management stated that the
most valuable domains are still owned
by the company. Here is the list of some
historical domain sales.
http://www.marchex.com/assets/pdf/
marchex_historical_top_500_domain_
sales.pdf
If the company received $30 million for
5 percent, then the remaining domains
can be worth as much as $600 million.
This is six times the current price tag.
Let’s look at it in a final way. On the
income statement, there are two revenue
sources: Partner and Other Revenue
Sources and Proprietary Website Traffic
Source. The second revenue source,
proprietary website traffic source, is
from the domain portfolio. This source
generates about $20 million in annual
revenues. This business model is very
high margin (higher than 50 percent),
and the income that it generates is about
$10 million per year. So, how much is
$10 million per year worth? Let’s say
$100 million, but remember this income
stream is based on the “parking lot”
business model. These websites are
barely developed. With that being said,
let’s just stick with our $100 million
valuation.
I don’t know if the domain portfolio is
worth $100 million, $300 million or $600
million. But, it doesn’t matter considering
the enterprise value is only about $100
million. Actually, even if the domain
portfolio was only worth $100 million
($500 per domain = highly unlikely), the
stock is still extremely cheap because we
didn’t even start talking about the digital
call advertising business.

Digital Call Advertising Business
Based on the current stock price and
the valuation of 200,000 domains, the
digital call advertising business is being
thrown in for free. Yes, you read that
right. It is free even though this business
is profitable and growing.
Currently, the digital call advertising
business generates revenues at a rate of
$120 million per year. EBITDA is about
$13 million, so based on this information
alone, it has to be worth about $100
million. It could be worth more because
the management states that once this
business gets bigger, margins will grow
to as high as 20 percent.
One can argue that the digital call
advertising business is worth less than
$100 million. I disagree, but even if it is
only worth $50 million, you are getting it
forfreeso it doesn’treallymatter.Ibelieve
that this business has the potential to be
worth north of $300 million considering
its growth potential. Businesses are only
at the early stages of accepting pay-for-
call advertising models, and Marchex is
one of the leading companies that will be
benefiting from this trend.
One other thing that I did not mention is
that there are approximately $50 million
of deferred tax assets on the balance
sheet that can be used to offset future
income taxes. Because we already have
plenty of value, I don’t even feel like
discussing it.
CONCLUSION
Any way you slice it, Marchex’s stock is
undervalued. The management knows it
and this is why they are buying the stock
for their personal accounts and using the
company’s cash to buy back shares. They
want to unlock value and this is why they
are separating Marchex into two separate
businesses. The stock is way too cheap
in relation to the underlying value.
accountsImanage,donotownshares
of Marchex, Inc. This report is not a
solicitation to buy or sell securities.
Neither Mariusz Skonieczny nor
Classic Value Investors, LLC, is
responsible for any losses resulting
from purchasing or disposing shares
of Marchex, Inc. You are advised
to consult your financial advisor or
conduct the due diligence yourself.
Why Don’t I Own This Stock?
I am asked this question on every
single company that I don’t own but
write about so I decided to include
the answer here. And, the answer is
simple – I cannot own everything I
write about even though I like it. I
only own 8 to 10 positions and when
I buy something, I commit to it for
several years. I can’t be changing my
portfolio every week just because I
found something “better.” If I did
this I would only be investing in
potentials and never riding them.
When one of my positions reaches
my target, I will sell it, and then, I
will go back to the ideas that I wrote
about and pick one that will take its
place.

PREMIER EXHIBITIONS (PRXI) -
OK, LET’S DO IT AGAIN
INVESTMENT SUMMARY
If you are a long-time subscriber
to Ultimate Value Finder, you will
remember that I launched the
newsletter in December 2011.
Originally, I planned to release the
first issue on January 1, 2012, but I
rushed the release because of major
news that took place during the last
few days in December 2011. Premier
Exhibitions made an announcement
that it was putting its Titanic Artifacts
collection for auction, and this was a
timely decision because 2012 was the
100th anniversary of the sinking of
the ship. Amazingly, the stock price
did not move up immediately because
there were some hedge funds that
were liquidating it. I quickly realized
that once these hedge funds ran out of
stock to sell, the price would skyrocket.
So, I released the newsletter early.
It turned out that I was right even
though I am almost always 100 percent
wrong on the price movement in the
short term. The stock price increased
from $1.65 per to $3.75 per share by
March 29, 2012. This was an increase
of 127 percent in just three months.
Not bad. At that point, I was sitting at
my computer thinking that at $3.75
per share, there was not much upside
left, but that the downside was huge
because they might not close on the
transaction or the closing might take
too long for investors. Consequently, I
sold my position not that far from the
peak.
Since then, the auction produced a
buyer of the Titanic Artifacts collection
who signed a non-binding letter of
intent for $189 million. You might think
that this is great – you put your item
on the auction, the buyer shows up,
and you close the transaction. There
is one problem, though. The closing
part of transaction is taking time and
you know how much Mr. Market enjoys
waiting around.
Anyway, by now, investors are simply
worn out from waiting even though the
letter of intent was signed only four
months ago. When they were excited
about the news of the auction, they
drove up the stock price to almost $4
per share. Now that they are mentally
exhausted, they are driving it down to
almost $2 per share. The market cap
is approaching $100 million while the
buyer is willing to pay $189 million for
Titanic Artifacts collection. So I say, ok,
we made money on it before because
previous market participants lost
patience. Now, they are doing it again.
Fine, let’s do it again.

COMPANY DESCRIPTION
On September 29, 2011, the
management separated Premier
Exhibitions into two operating divisions:
an exhibition management subsidiary
and a content subsidiary. The purpose
of this separation was to monetize its
content subsidiary, which holds the
Titanic Artifacts collection.
Exhibition Management Subsidiary
Through the exhibition management
subsidiary, the company is in the
business of presenting museum-
quality touring exhibitions around the
world. They are presented at exhibition
centers, museums, retail locations and
other high-traffic venues. The company
makes its money through admission
ticket sales, co-production agreements,
third-party licensing, merchandise,
and sponsorships. The two most well-
known exhibitions are the Bodies and
Titanic Exhibits.
Bodies
The Bodies Exhibition, which shows
preserved human bodies dissected
to display bodily systems, has been
viewed by more than 15 million people
worldwide. The following photographs
are a sample of what the Bodies
Exhibition has to offer.
Titanic
The Titanic Exhibition has been viewed
by approximately 20 million visitors.
It features artifacts recovered from
the wreck of the famous ship and tells
the Titanic’s story from construction
through sinking, discovery and
conservation.
Content Subsidiary
Through its content subsidiary, the
company owns the Titanic Artifacts
collection. Premier Exhibitions has
two sets of Titanic artifacts: the “1987
Artifacts” and the “Post-1987 Artifacts.”
The “1987 Artifacts” set consists of
2,000 pieces that were recovered
from the wrecked ship in 1987. The
“Post-1987 Artifacts” set consists of
more than 3,000 artifacts that were
salvaged during expeditions in 1993,
1994, 1996, 1998, 2000 and 2004.
Until August 12, 2011, the company
did not have the title to the “Post-1987
Artifacts.”

The company fought in court for 17
years to resolve the ownership issue
of the “Post-1987 Artifacts” and finally,
on August 12, 2011, the United States
District Court for the Eastern District
of Virginia, Norfold Division, issued an
opinion granting an in specie salvage
award of the “Post-1987 Artifacts” to
Premier Exhibitions with a value of
approximately $110 million ($2.13
per share) as compensation for the
recovery and conservation of more
than 3,000 artifacts salvaged from the
Titanic wreck site.
DARLING OF WALL STREET
The stock of Premier Exhibitions used
to be a darling of Wall Street as shown
in the following graph.
As you can see, the stock price went
from $0.08 to $18.00 per share in a
matter of four years. How could Wall
Street not have loved this company
considering one could have turned
$100,000 into $22.5 million in four
years assuming one got in at the
bottom and sold at the top?
COLLAPSE
Unfortunately, on Wall Street, there is
no such thing as unconditional love. If
your stock price continues to go up,
they love you even if your underlying
business is struggling. However, when
the stock price starts falling, then the
romantic affair comes to an end. This
is exactly what happened as shown in
the following chart.
The stock of Premier Exhibitions
completely collapsed because the
company was mismanaged by the
previous CEO. He spent a lot of money
to chase growth initiatives at all
costs. As a result, operating expenses
increased significantly and when
revenues started trending downward
in 2008, profits collapsed. If he had not
been ousted, the company would have
gone bankrupt.
TURNAROUND
About four years ago, Mark Sellers, a
major shareholder, replaced the former
CEO with a turnaround CEO, to help
stop the bleeding and get the company
back on its feet. Since then, the new
CEO was able to save the company
from bankruptcy and gain control of
expenses. However, turnarounds are
similar in a way to the rehabilitation of
houses. You never know what you are
going to find until you open up the wall,
and usually it costs more money and
time than originally anticipated. Premier
Exhibitions was no exception. The
turnaround efforts were not supposed
to take as long at they did. As you can
imagine, investors did not hold back
their criticism. In the end, that’s what

investors are best at – complaining
and telling managers how they should
be running their companies.
After four years of hard work, the
turnaround is finally showing very
good results, although the market is
completely oblivious to it. The following
is the company’s income statement
from Fiscal Year 2008 through the first
nine months of Fiscal Year 2013. The
fiscal year ends in February.
As you can see, Fiscal Year 2013 will
be the first year in four years that the
company will be profitable. EBITDA
for the first nine months was $6.5
million with the third quarter being
the slowest. By the time the fourth
quarter is reported, EBITDA should be
approaching $10 million. I will address
the valuation later.

IT IS NOT ABOUT THE EXHIBITION
BUSINESS
The turnaround that I just described
is about the exhibition management
subsidiary, but this is not why investors
have been investing in Premier
Exhibitions for the past four years.
Since Mark Sellers brought in the new
CEO to turn the company around, the
investment thesis has been all about
the Titanic Artifacts collection, which
were appraised at $189 million while
the market cap of the company was
much lower than that.
Because this was an asset play, the
stock price fluctuated based on what
investors believed was going to happen
with the Titanic Artifacts collection. At
one point, many believed in the value
of the Titanic Artifacts collection so
they bid up the stock price. Then, they
lost patience so they sold it off. Then,
the company announced that it was
putting the Titanic Artifacts collection
up for auction so they got excited and
bid up the stock price again. Soon, they
realized that the auction is not the same
as the final sale so they got bored and
sold it off. Then, the company signed
a letter of intent with the buyer for
$189 million, and they bid up the stock
price again. Now, they are realizing
that the letter of intent is not the same
as the final sale and they are selling it
off again. This is so ridiculous that you
could not write a better movie script if
you wanted to. Why can’t they just take
a seat and wait until the investment
thesis plays out? If they could, I would
not be writing about it because prices
would be efficient.
Anyway, where we are now is the
company put Titanic Artifacts up for
auction last year. As a result of the
auction, several potential buyers
showed interest in the artifacts, and
on October 15, 2012, the company
announced that it had entered into a
non-binding letter of intent to purchase
the Titanic Artifacts collection for $189
million. After this news, the stock price
increased 32 percent from $2.20 to
$2.90 per share. However, it didn’t take
too long for investors to get bored again.
We are now at the end of February and
the transaction has not closed yet. So,
what are they doing? They sell it off
again back to the $2 something level as
if the letter of intent never happened.
Obviously, I do not have a crystal ball
so there is no way to be 100 percent
certain whether the transaction will
close because there are several
contingencies. With that being said,
picture this. You have a house on the
market for $200,000, which is what
a realtor told you to list it at. After a
week, you get an offer for this amount.
Soon, you learn that the buyer cannot
get his or her financing and has to walk
away from the transaction. What do
you do? Do you throw in the towel and
decide that your house is worthless or
do you put it back on the market with
the intention of finding a new buyer? Of
course, you put it back on the market.
It is the same situation with the Titanic
Artifacts collection. I don’t know if the
transaction with the current buyers
will close, but even if it falls apart, the
Titanic Artifacts collection is still worth
about $189 million. If it is not this buyer,
there will be another buyer. It might not
be at $189 million, but considering that
the market has thrown in the towel and
driven the market cap back to almost
$100 million, I think there is enough
margin of safety.
Also, everybody is so tired of waiting on
the sale of the Titanic Artifacts collection

that they completely forgot that Premier
Exhibitions also has an operating
business. Remember, the management
has been diligently working on turning
the exhibition business around, which
according to Greggory Schneider, 6
percent owner of Premier Exhibitions,
is worth $75 million or $1.50 per share.
In other words, at a price of almost $2
per share, the crazy market is not too
far away from giving away the Titanic
Artifacts collection for free because the
buyer is taking too long to close the
transaction.
VALUATION
As mentioned before, for several
years, the investment thesis in Premier
Exhibitions was the following – the
value of Titanic Artifacts is higher than
the market cap of the company.
This is the valuation that I presented
when I wrote about Premier Exhibitions
in the January 2012 issue.
• “Post-1987 Artifacts” = $110
million or $2.13 per share
• “1987 Artifacts” = $35 million or
$0.75 per share (based on an outdated
2007 appraisal; it should be much
higher)
• Intellectual Titanic Property (Film
footage, digital archives, etc.) = $44
million or $0.94 per share (based on
an outdated 2007 appraisal; it should
be much higher)
• Exhibition business = $0 (even
though it has value, I completely ignore
it)
Total Value = $189 million or $3.82
per share. This is the amount that the
buyer signed the letter of intent for.
Notice one thing – I assigned zero
value to the exhibition business. At
that time, the exhibition business
was in the middle of being turned
around and it was just breaking even.
The management’s ability to turn
this business from losing money into
breaking even was a big milestone,
but I didn’t feel that at that point it
had much value. But now, more than
a year later, the exhibition business is
doing much better. In other words, the
turnaround efforts are finally showing
results. The interesting thing is that
investors are so tired of waiting for the
closing of the Titanic Artifacts collection
sale that they are not even bothering
to look at the progress that has been
made with the exhibition business. As
I mentioned previously, the exhibition
business will be profitable in Fiscal
Year 2013 which ends on February 28,
2013. I estimate that EBITDA will be
around $10 million. Consequently, the
exhibition business is probably worth
between $70 and $80 million. If the
company continues with its progress,
this business could be worth even more
next year. But, let’s not get ahead of
ourselves. The following text is taken
from Form 13D filed on November 14,
2012, by Greggory Schneider.
“Mr. Schneider believes Premier
Exhibitions’ common stock is
dramatically undervalued at current
levels. With a $189 million ‘tax efficient’
sale of the Titanic assets (RMS Titanic
Inc.) underway, which will likely net
the company $3.30-3.50/share,
and a profitable operating business
that has experienced a successful
turnaround, the sum of parts value can
easily exceed $4.50/share. Given the
seasonality of the operating company
it should not remain a public entity.
The company suggested in its most
recent conference call that it will be
profitable in its current (slowest due
to seasonality) quarter and expects

to be profitable going forward, and is
working on interesting/exciting new
content/exhibitions. The company
managed to earn nearly two times as
much EBITDA (nearly $5,000,000) in
the quarter ending August 31st which
occurred after the 100th anniversary
of the Titanic buzz (quarter ending May
31st) had settled, which speaks to its
substantial operational improvement
and makes the timing ideal for a sale
of the remainder of the company.
Mr. Schneider believes the operating
segment of the company can easily
fetch $75 million ($1.50+/share) using
a conservative EBITDA assumption
for the next two quarters without
adding value for the upcoming new
exhibitions and content which the
company mentioned in its most recent
conference call. While the company has
indirectly hinted that it may seek to sell
the operating subsidiary during various
press releases, Mr. Schneider would
like the company to initiate a public
and formal process for monetizing the
operating company so as to ensure
shareholders that they are receiving
maximum value. Mr. Schneider
believes the market is completely
ignoring the value of the operating
business and also misunderstanding
the tax consequences of the Titanic
transaction. With the Titanic assets
well on their way to being sold for an
amount that far exceeds the company’s
current market capitalization, Mr.
Schneider believes the best way to
reflect the company’s true value is to
immediately initiate a formal process
to privatize or sell the operating portion
of the business (Premier Exhibitions).”
While you might argue whether the
exhibition business is worth $75
million, at these price levels you don’t
have to be that precise. If you add $75
million to $189 million from the Titanic
Artifacts collection, you get $264
million, which is significantly higher
than the current market cap. In other
words, there is enough room to be
wrong on the valuation and still come
out ahead.
Here is the balance sheet for
informational purposes.

CONCLUSION
I doubled my money on Premier
Exhibitions because I was patient
and did not get exhausted like others
did. I sold my entire position because
investors happily bid it up so high that
it didn’t make much sense to hold it
anymore. Right after I sold it, investors
got exhausted again and drove the
stock price so low that it is becoming
ridiculous again. At this point, there is
a lot more value in Premier Exhibitions
than what the market is assigning to
it. Now, what you have to decide is
whether the value that you are getting
is enough for the price that you are
paying. Obviously, the best case
scenario would be if the market drove
the stock price to as low as $1.50 per
share. This way, the price tag would be
covered by the exhibition business, and
the Titanic Artifacts collection would
be given away for free. I don’t know
if the market will get crazy enough to
send it this low, but it might. Just give
it a few more weeks and we might see
it there. Or, if the buyer of the Titanic
Artifacts collection does not close the
sale, investors will likely sell it off this
low saying something like this, “See,
I told you no one wants these Titanic
artifacts. They are worth nothing. Sell,
sell, sell.” If this ever happens, I think I
will back up the truck. In the meantime,
I am just going to be watching, but this
does not mean that it is not a good deal
to buy shares at these levels.
accounts I manage, do not own
shares of Premier Exhibitions. This
report is not a solicitation to buy
or sell securities. Neither Mariusz
Skonieczny nor Classic Value
Investors, LLC, is responsible
for any losses resulting from
purchasing or disposing shares
of Premier Exhibitions. You are
advised to consult your financial
advisor or conduct the due
diligence yourself.
Why Don’t I Own This Stock?
I am asked this question on every
single company that I don’t own but
write about so I decided to include
the answer here. And, the answer
is simple – I cannot own everything
I write about even though I like it.
I only own 8 to 10 positions and
when I buy something, I commit
to it for several years. I can’t be
changing my portfolio every week
just because I found something
“better.” If I did this I would only
be investing in potentials and
never riding them. When one of
my positions reaches my target, I
will sell it, and then, I will go back
to the ideas that I wrote about and
pick one that will take its place.

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