http://www.theglobeandmail.com/globe-investor/fairfax-boosts-stake-in-rim/article4435245/
your thoughts fellas?
Well, if the stock goes up, they’ll get big bonuses. If it goes down, they lose a bunch of someone else’s money…
Fairfax isn’t a mutual fund its actually an insurance company with a hedge fund wrapper similar to BRK.B…
i’m very surrised actually to see him jump into RIM in a major way…
Yeah this is truly bizarre. Tech, turnaround…this is value investing heresy.
“Come on guys, have faith. He’s dollar cost averaging in turn around companies, that always works.” - Bill Miller
i just wish i can understand his rationale cause I really admire his skills…
from press release, he just says he feels the company is not going bankrupt, has strong people and believes in management…
rim will problably be operating for sometime to come,but i’m not exactly sold on the morale of the companny (which from my sources tell me ppl want to leave asap) and the management…
He’s too stubborn to admit he is wrong, like Bruce Berkowitz with STJ (St Jude’s Medical).
Maybe it’s a Canadian loyalty thing since FFX and RIMM are both based there (just kidding, by all accounts Watsa seems to be as coldly rational and straight-and-narrow as Warren E Buffett.)
Me, I am buying NOK (Nokia) with my play money. Probably lose it all, but 1-in-100 chance they will be the next AAPL (Apple) and turn around. Who needs CFA when NOK sells for $100/share? Seriously, I’ll be OK if they do what Motorola did and survive the slump. Even better if they don’t pay some hotshot engineer from Qualcomm $100 million pa to come be a co-CEO.
This is why I think it’s important to diversify IMO. I see the point of “put more money behind your best ideas”, but I think you also need to think about whether one position can slap you if you’re wrong. Especially in a turnaround case where they may underperform for an extended period. I think the best way to reconcile these issues is to go ahead with a concentrated portfolio, but weight your bets equally…you may see lower returns that way but you have to also think about the probability of each bet working out…totally unknown…
RIM will not be around much longer. They’ll get some money for their patents, but their operations will cease. There’s a big risk for businesses to continue to support Blackberries. When RIM goes out of business, their ability to provide secure cell/data service will probably also stop. Doesn’t make any sense for a business to stick around. Now that there are viable alternatives in the marketplace (we allow employees to use Good for Enterprise on their iPhones now) the fall of RIM will be that much quicker.
Jan '14 5 strike puts trading for a buck
LOL just saw this. That guy is always a classic for me.
this company was an epic short of 2011…
DOn’t think Fairfax is hoping for a turnaround; I think there’s hoping that RIM will be bought at a nice premium. But I’m wondering, who is in the position to buy RIM as a strategic partnership? Maybe Nokia or MSFT? MSFT has the money but I’m not sure they could make it work as a partnership. Thoughts?
Since when is hoping for a taekover, a valid value strategy?
Only Watsa knows WTF he is doing.
…i think a lot of value investors ground their thesis on their belief a company is under valued or selling below replacement value and therefore a suiter is going to come and realize that value through an acquisition…
i don’t think there is anything wrong with that at all…its actually central to “value investing” …
By that logic any buying decision is “value investing”, except when the stock goes to 0. Of course you think there’s “value” when you buy a stock, or why else would you buy it? Then you can say “a black swan ate my investment!” if a stock (RIM) goes to 0. It wasn’t my fault! Look at the black swan!
value investing is buying based on business fundamentals whereas TA is based on expectations that someone else is going to buy for whatever reasons…they’re fundamentally different…
Thats actually a key catalyst looked for by many value investors.
As for RIM, I’d like to see what their emerging markets sales look like and what barriers for entry exist in those markets for competing products before I write them off completely. In terms of developed markets I think they are dead in the water and its unlikely that they have products in their pipeline that can win back market share. However, with their valuations being what they are, if they have strong revenue growth in emerging markets they may be a compelling investment especially if you consider their patent/technology portfolio, elements of which they can likely sell/licence.
It would take alot of due dilligence on my part to understand what RIM looks like as an investment and where I am at right now and with the weather being as nice as it is, I think I am going to invest that time and energy working on my tan.
i just received the annual report in the mail today…i’m thinking much of what will occur will happen after the release of BB10…but damm this thing looks cheap…it really reminds me of what i was reading in graham when he said sometimes companies trade at 20x and a few years after that they go to 2-3x…just from the look of it, rim should be worth around 15 bucks on breakup value…maybe slightly less…but i’ll dig deeper…
Like Buffett said, own a stock as if the market will be shut down for the next 10 years. I have heard he is a value investor or something.
Hoping for a takeover (when there is no impending merger) is not a value strategy. Your happiness depends on a specific event and not on the market being a weighing machine in the long run.
Like I said, maybe Watsa sees real value and discount to intrinsic value in RIM’s price. I don’t. He might be right but no one else I know has a clue what he is doing.