BlackBerry rallies; Citron thinks shares are worth at least $15


Short-seller Citron Research, the bane of many a growth stock investor, considers BlackBerry (BBRY +4.6%) an unappreciated value play.

Citron highlights new chairman/CEO John Chen's success at turning around Sybase (sold for $5.2B to SAP), and declares his early moves - the Foxconn deal, focusing on enterprise software/services - have "significantly de-risked BlackBerry's balance sheet."

The firm also considers BES 10 to be well-positioned in a fast-growing mobile device management (MDM) software market - it points out BES 10's Google Play rating (4.0/5) beats that of rivals Good Technologies, AirWatch, and MobileIron - and that government support remains healthy due to BlackBerry's security expertise.

Also mentioned: The value of BlackBerry's patent portfolio; the popularity of the QNX OS in the automotive market (200+ vehicle wins); BBM's growth since arriving on Android and iOS; and a 36M-share drop in short interest from Dec. 15 to Dec. 31 to 107M (suggests a short-squeeze is in play).

Citron's report (.pdf)

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Comments (62)
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Lift off imminent.

     

    Long-time coming. The best victories are the ones which are snatched from the jaws of defeat.

     

    Rest easier Longs and enjoy the ride.
    17 Jan 2014, 01:29 PM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    LYogy,
    It is certainly easier to breathe above 9, I feel the curse of TH putting Blackberry up for sale at $9 is broken.

     

    Guys,
    Didn't I say yesterday that Marcap shows up with the usual bankruptcy prediction right before the big move up. :)
    Marcap, what's up buddy? Up 6% today, what say you?
    17 Jan 2014, 04:20 PM Reply Like
  • farmwersteve
    , contributor
    Comments (348) | Send Message
     
    Funny, I haven't heard from Marcap since the upturn after the last earnings call.

     

    Maybe he was right about a bankruptcy, just predicted the wrong one?
    17 Jan 2014, 04:35 PM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    He was just here like yesterday, I said I'll sell him few shares at $18.
    Marcap, guess what..
    "..the rate just went up, 10%." - Liam Neeson, Taken.
    17 Jan 2014, 04:44 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    the next downward blip the crazies will be back in force......end of the world...you know like the people in parks and streetcorners with the signs around their necks.

     

    We ar sinners and must repent.
    17 Jan 2014, 05:35 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    Lesson: never panic
    17 Jan 2014, 06:35 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    Yogi
    Just read John Neff for inspiration! The race belongs to those who persevere with fortitude and sound judgment! can anyone say bankruptcy? it will be a little while anyway
    18 Jan 2014, 10:14 AM Reply Like
  • WarBuffet
    , contributor
    Comments (24) | Send Message
     
    Prem loves you guys!
    19 Jan 2014, 02:38 AM Reply Like
  • Stock Jackal
    , contributor
    Comments (545) | Send Message
     
    "Maybe he was right about a bankruptcy, just predicted the wrong one"?

     

    One of the best comments on SA to date +1
    19 Jan 2014, 04:35 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11171) | Send Message
     
    Citron also famously went long (SOHU) and the market reaction was laughter.

     

    SOHU has pretty much doubled since then.

     

    Long BBRY.
    17 Jan 2014, 01:35 PM Reply Like
  • WarBuffet
    , contributor
    Comments (24) | Send Message
     
    you guys are playing right into Prem Watsa's hands...go for it

     

    Your getting a minority share in a company he's gonna control so when they go bankrupt he'll get to keep the money you just plowed in.
    19 Jan 2014, 02:39 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11171) | Send Message
     
    WarBuffet:

     

    Please list all of the companies where Prem Watsa screwed the shareholders and walked away with major profits.

     

    Take as much space as you need...
    20 Jan 2014, 10:23 AM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (1652) | Send Message
     
    The (extraordinarily negative) report on The Street a few minutes ago http://bit.ly/1awAw3o holds the opposite opinion: all is doomed because of past performance....repeats the same content they had there last week in their earlier (extraordinarily negative) article.

     

    It seems the shorts are running out of allies. I see someone bought >2m shares in one go at 1 PM. Interesting. Look at today's price chart: that is exactly what a short covering exercise looks like. Squeeze? You bet.
    17 Jan 2014, 01:39 PM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    Crispin,
    I honestly don't get how The Street is still around, how can anyone be as wrong as they have over and over and over..
    I don't think it is a squeeze, at least not yet, you'd see 2-3 bucks up in a day. Some are covering, some just buying; my dad bought today (after refusing to buy at 6 when I told him).
    17 Jan 2014, 02:09 PM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (1652) | Send Message
     
    Interesting. The Street content is so utterly biased that I am wondering what their game is - even worse than CNBC which seems to be agenda-driven, not advice-oriented.

     

    Citron is probably warning their paid clients that there is a substantial price recovery coming and they should get in on the deal before it 1/2 expires. A squeeze might not happen in a big way unless something like a major announcement prompts Mon and Pop to pick up a few dozen just in case.

     

    I am watching for it to pop (it might not) if the covering doesn't push shorting below say 50m shares by the time it reaches $11. If it popped $3 in a couple of days in heavy trading above $11, the shorts would be losing about $300m which is steep even for the high risk guys. That is why I pointed to the >2m share swap at 1 PM. The smart shorts are covering, some quickly.

     

    BTW what time was the sale (closer to 2.5m shares) and what time was the uprating from Citron? Think 'insider'.
    17 Jan 2014, 02:23 PM Reply Like
  • Loon-a-tick
    , contributor
    Comments (1928) | Send Message
     
    I thought when you squeeze out a short it looks brown.
    17 Jan 2014, 02:48 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    2M shares is loose change for some people...if they sense a big potential winner...$18M...could become $100M at some point.
    17 Jan 2014, 05:38 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    andy you are a legend!
    18 Jan 2014, 10:16 AM Reply Like
  • manicdvln
    , contributor
    Comments (1530) | Send Message
     
    Impending correction in markets will drag this stock down for now.

     

    I would wait before buying.
    17 Jan 2014, 01:44 PM Reply Like
  • andypochta1
    , contributor
    Comments (1305) | Send Message
     
    Blackberry most often moves opposite to market. I do however agree with you that we may see correction in US market. The Canadian market is under-appreciated in my opinion. Bought some Bombardier yesterday and today.
    17 Jan 2014, 02:11 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    @ andypochta. smart move on Bombardier...my dad was an engineer who worked on the Challenger...we moved to Mtl in 1965....there has been so much negative press about the C series not hitting their dates...when they miss there are always pullbacks...have made a ton on this and am now Long...get a handle on the different divisions and their contributions. how the company works. A few years back there was a major layoff in the corporate jet section...stock tanked...what people did not know was 75% of these people were transfered over to the commercial division. Transportation is another big potential. Top quality products but I can not say the same for management.

     

    Look at the energy sector and compare C stocks to US in the sector. C$ could go to .85...energy should drive to parity in 2015. SU a top pick.
    17 Jan 2014, 05:46 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    Dumped all today @ansypochta....they keep backing off on C series dates and now !!!!! re cash....like the company, not the current situation....trimming corp jets is one thing...but this is not good news....again products great management sucks.
    22 Jan 2014, 09:45 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    according to one famous SA Short "BBRY is evaporating" (yesterday)...others see pending doom not far away. Another "the Chen effect has worn off" (must be right...some people seem to know everything). Clearly they are far more in tune with BBRY than Chen....wish they would let him know that he "is incorrect" (an other reqular sa poster). And now a $15 target....the end is near...run for your lives!

     

    Now up 68% on Dec 10 buy and absolutely terrified that I might make more!
    17 Jan 2014, 01:44 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    Kevin, I love it! I will be deleted but I've been thrown out of better places! The TH debacle is over--our window of opportunity is being closed before our very eyes--Don't know whether to be happy or said. All I can say to those longs out there that had fortitude is--the fat lady was at the mike but never sang--congratulations to all buyers as she was walking up there these past 3 months.
    18 Jan 2014, 10:23 AM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    sorry to report that I am now up 72%. When will it end?! My matress is full allready!
    18 Jan 2014, 11:06 PM Reply Like
  • rclarke7
    , contributor
    Comments (42) | Send Message
     
    Be leary. I am a BlackBerry fan. Are the shorts (citron) revving up for another attack? No news here and rising too fast. Be careful
    17 Jan 2014, 01:57 PM Reply Like
  • Weighing Machine
    , contributor
    Comments (878) | Send Message
     
    Citron almost never touts longs. Citron is one of the most credible voices in the market.

     

    Once BBRY gets sorted out it will either be a cash machine or parted out at a nice profit for s/h. This is a BUY.
    17 Jan 2014, 02:10 PM Reply Like
  • Crispin_in_Waterloo
    , contributor
    Comments (1652) | Send Message
     
    Rising fast enough for a short squeeze? There are many shorts who borrowed in the 9-11 range who are going to be getting might uncomfortable about now.
    17 Jan 2014, 02:11 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    try to get the mindset of the people who have a great deal on the line...what to you think their valuation is? too fast is relative to what?
    17 Jan 2014, 05:50 PM Reply Like
  • John Gibson
    , contributor
    Comments (78) | Send Message
     
    I hated citron when they were short qcor. but i sold qcor for prof and now i like citron because they are on the same side of bbry. fickle emotions. anyways, love these setups
    17 Jan 2014, 02:35 PM Reply Like
  • Thurai sivakumaran
    , contributor
    Comments (29) | Send Message
     
    Right on LYogi. I am your devoted follower and true believer of your thoughts.
    17 Jan 2014, 02:36 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Why thank you.

     

    In tribute I request that you bring me apples before they go completely stale and begin to rot.
    17 Jan 2014, 03:31 PM Reply Like
  • Redrut
    , contributor
    Comments (1830) | Send Message
     
    Haha Sneha was actually CALLED OUT by Citron.....oh dear!
    17 Jan 2014, 03:04 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    If you were someone who wanted to buy the company at some point, what would you be doing now?
    17 Jan 2014, 05:55 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Organizing a bid in the $25-30 range
    17 Jan 2014, 06:03 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    and how about share ownership?
    17 Jan 2014, 06:29 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Oh I misread your question.

     

    If you are a trader you watch for a pullback on Monday in Canada.

     

    If you believe in the company and its technology then what does it matter if you are in for $8, $9, $10 if you believe the company is severely undervalued and worth much more?

     

    No sense in trying to predict the bottom. Jump in, sit back, and watch how the cream rises to the top as it will over time.
    17 Jan 2014, 06:40 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    people who what to own a company are not traders...they buy and build..then get a seat on the Board...to start.
    17 Jan 2014, 07:21 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Well that's been Fairfax's plan for some time. If Prem wants the company he better be prepared to pay up, the $9 share offer last September was their attempt at pulling the wool over the shareholder's eyes.

     

    http://bit.ly/1hzGqk6
    17 Jan 2014, 07:31 PM Reply Like
  • BugleBoy
    , contributor
    Comments (271) | Send Message
     
    @LYogi and kevinconway,
    Thanks for considering such an idea.
    I get totally exhausted reading some of the nonsense of the three or four persistent and perpetual antagonists on this board - it is the same stuff rehashed and re-fought over and over. The only positive from all that blather is the links that people find and share like ELLAS gave us on January 10th from George Kesarios' article. (ELLAS wrote regarding iPhone and Android security issues.)
    http://seekingalpha.co...

     

    So good on ya, and keep thinking and sharing ideas on the company. That makes for good reading and thought on my part.
    Cheers,
    BugleBoy
    17 Jan 2014, 09:07 PM Reply Like
  • ELLAS
    , contributor
    Comments (2705) | Send Message
     
    Thank you BugleBoy,
    It's been getting very tiresome lately regarding all the nonsense doom/gloom predictions. Its one thing to present an opinion, and another to make that opinion sound as a fact.
    This just causes confusion, something I believe is deliberate.

     

    Present the facts and the links to back them up. Seldom do I get a reply back, due to the hard evidence I present via links. Those that read this know exactly who they are.
    18 Jan 2014, 08:09 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    If the market is saying this is where BBRY is going...then that is where it is going Bugle Boy....run with the bulls...but watch out for the horns...get out of the race when there is clear evidence that you should take a nap.
    18 Jan 2014, 11:10 PM Reply Like
  • Userfriendly kernel
    , contributor
    Comments (73) | Send Message
     
    Please. Someone. What about monetizing BBM Money. Why cant we use our NFC here in North America yet. What the hell is taking so long. Or, is Apple and Google holding Blackberry back. Reminds me of the Avro Arrow 1950`s
    17 Jan 2014, 10:43 PM Reply Like
  • BugleBoy
    , contributor
    Comments (271) | Send Message
     
    Good question Userfriendly,
    According this article, it has been going since late February 2013 and had 60000 users in 90 days.
    http://bit.ly/18Vyrc3
    1. I would love to know why it has not made it to other markets when the reviews were positive.
    2. I would love to utilize this service myself.

     

    It could be a strong incentive for increasing interest in BBRY if it takes off elsewhere, especially if it is cross-platform.
    17 Jan 2014, 11:37 PM Reply Like
  • Userfriendly kernel
    , contributor
    Comments (73) | Send Message
     
    Just read that article. How interesting would it be to get your paycheque sent by your company directly to your BBM account. How about the money to pay for gas, hotel, air etc while your on the road. There is a lot of options here to monetize BBM since it is pin to pin security.
    18 Jan 2014, 02:50 PM Reply Like
  • ELLAS
    , contributor
    Comments (2705) | Send Message
     
    BBM Money is being utilized 1st in Emerging Markets. And its been picking up some nice steam. Once they reach a certain amount of users (in %), I believe they will target more countries and territories.
    LINK:http://bit.ly/KrIPU6

     

    The key to BBM Money is the very fact BBM is 100% secure. And the only secure messaging platform to date, backed by the BlackBerry name.
    18 Jan 2014, 07:59 PM Reply Like
  • mvermaak
    , contributor
    Comments (504) | Send Message
     
    I suppose George Kesarios can now feel he got some credit as he was very alone in recommending or at least never bashing Blackberry
    Clearly things are changing for Bbry stockholders
    At some stage i fealt like an international fool owning the stock and friends reminded me daily of how much money i had lost
    Seeking Alpha is good to read on a saturday morning
    18 Jan 2014, 06:05 AM Reply Like
  • Stock Jackal
    , contributor
    Comments (545) | Send Message
     
    I have always maintained my Long position and bullish outlook on BBRY. Check all of my articles and the dates.
    19 Jan 2014, 04:42 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    Read John Neff again for tips. He bought Citibank--kept getting pounded down--he kept buying more--kept getting pounded down.

     

    Blackberry is not there yet. But the $15 is more believable than the $4--that is for sure. Reason I have always believed is who knows more than Watsa--why would he put another 500 million in--for grins? Why would he get his friends to pony up 750 million. In my opinion he recognized the problem--poor business sense and leadership--not blackberries fault--Same thing report says I'll bet by Citron.
    18 Jan 2014, 10:31 AM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    something good will happen--Walter Schloss--Something good has happened--we are off to the races with this report
    18 Jan 2014, 10:42 AM Reply Like
  • ELLAS
    , contributor
    Comments (2705) | Send Message
     
    Short-seller Citron Research? Am I reading this right? Good news, and should make the shorts a lot shorter in the pocket book. They've been pounding BBRY for over a year now.

     

    Good times are coming to both BBRY and Longs. IMO
    18 Jan 2014, 08:04 PM Reply Like
  • ELLAS
    , contributor
    Comments (2705) | Send Message
     
    I would also like to point out the Canadian Toronto Stock Exchange. BlackBerry is a $10 per Share stock price. This stock is heading UP, and the next quarterly results will be positive IMO. The last quarterly results were not positive but not overly negative either, yet the stock price went up. BBRY put all the negative in that quarter. And by then, I can see all those Z10 write offs will be sold before we see the next quarterly results.

     

    TORONTO STOCK EXCHANGE
    ----------------------
    BLACKBERRY LIMITED
    $9.98 +0.61 +6.51%
    ----------------------
    19 Jan 2014, 01:38 AM Reply Like
  • ELLAS
    , contributor
    Comments (2705) | Send Message
     
    More Good News:

     

    QUOTE:
    According to Defense Department officials, a Pentagon system intended to secure a mix of brand name smartphones for warfighters will primarily support BlackBerry smartphones when the tool starts launching later this month.

     

    About 80,000 BlackBerry’s and 1,800 Defense-owned Apple and Android-based phones and tablets will begin being hooked up to the new management system on Jan. 31, officials announced on Friday.

     

    The number of devices will grow to 300,000.

     

    BlackBerry smartphones will make up 98% of New Pentagon System
    http://bit.ly/19E1mIz
    http://bit.ly/LylCRs
    19 Jan 2014, 02:06 AM Reply Like
  • Zzoot1
    , contributor
    Comments (211) | Send Message
     
    Canadian Banks' Analysts mostly have targets lower that the current price.

     

    So why do they own so many shares?.. and still adding
    19 Jan 2014, 05:38 AM Reply Like
  • Dmitry Kovalchuk
    , contributor
    Comments (411) | Send Message
     
    Folks, if you don't see many notorious shorts commenting on bullish events it is not because they are scared and running but because they were most likely the ones who has successfully covered their short positions in a recent time earning a good buck on the stock.
    Most of them are interested in $BBRY no longer and are searching for other short candidates.
    19 Jan 2014, 06:45 AM Reply Like
  • BlackBelt JohnChen
    , contributor
    Comments (4) | Send Message
     
    "A leader is one who knows the way, goes the way, and shows the way." —John Maxwell

     

    In conclusion, the authors cite this as one of their rare long positions:

     

    Our readers will know that Citron does not undertake a long position in any stock often. And when we do recommend a stock, it is with a reason. (For example, we tweeted about APOL below 20 (after having exposed its major regulatory vulnerability in 2009 when it was over 80), MOVE at 11 in May 2013, WUBA at 24 in October, ATHM below 30 in December. We shared our SOHU valuation analysis writeup (March and August 2012, when the stock was in the 40’s). These positions have stood the test of time respectably. It is Citron’s opinion that Blackberry shorts would be well served to update their research. (Many already have: short interest has fallen from over 32.2% in mid-November, to appx 20.7% as of 12/31/13.) It is Citron’s opinion that it is suicidal to bet against well-capitalized strong management in the enterprise mobile space. It’s just our honest opinion that once conservative valuations against Blackberry’s very viable and highly legitimate enterprise technology businesses are in place, this stock could easily double. The anticipated 2014 IPO’s of much less firmly-rooted competitors will only serve to bolster this thesis. Of course … as always … “Cautious investing to all” … long or short.

     

    http://on.barrons.com/...
    19 Jan 2014, 12:53 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1305) | Send Message
     
    the report was well written and well thought out---note the last point you cite--Citron is saying the IPOs coming on that will be valued at a minimum probably of a billion or upwards--that Blackberry has much more clout and has a 0 valuation--once the IPOs get the animal spirits going --IMO Citron is suggesting they soon will find blackberry
    20 Jan 2014, 09:55 AM Reply Like
  • ATInsider
    , contributor
    Comments (424) | Send Message
     
    Nice to see even a short seller admit BBRY is a good long term play.
    19 Jan 2014, 01:20 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    already well on its way to $15, hit $11.81 CDN this morning.
    20 Jan 2014, 10:28 AM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    Have posted this on other articles....case you missed it...now up 103% on Dec 10 buy. Just returned from a few days of meetings with business friends. You can continue to listen to self serving and self proclaimed experts on security, apps, etc etc OR you can listen to what top decision makers have to say:

     

    SVP major intl. bank 45K+ employees: BB is current. There has been employee pressure for other devices. 3 issues:
    1. IT people at the bank say no go. Not going to take the risk on security issues. Many of the banks major corporate customers of the same mindset.
    2. Productivity. use of phones for non business related activity is a problem...do not want apps that are time wasters. Cracking down on this.
    3. younger employees a problem as are recent grads...self centerd and demanding...pull back on hiring and ditto accross a number of major businesses that are getting fed up.

     

    Head of HR with a major government agency: 30% of employees have been identified as being "excessive users" of smart phones during the day...facebook, games, texting, shopping etc. Some were found to be using half or more of their day for these activities. BB phone for govt but now plan to restrict use of personal phones. union issues but these will be resolved. Ditto above concerns with younger employees.

     

    Will be $20 easy by year end and likely $30-35 within 2 years. Market has built into the price the writeoffs and restructuring. When this is out of the way this will be a very profitable busines. I have no time for the pretenders on SA...they do not get it and, even if they sound good, I would not pay any attention....I will listen to the people whom make the decisions in business and gov.
    22 Jan 2014, 09:51 PM Reply Like
  • LYogi
    , contributor
    Comments (3114) | Send Message
     
    Great comment Kevin.

     

    Very enlightening.

     

    Makes perfect sense.

     

    And now BB10 arrives to fill this growing need to maintain efficiency and at least to some degree limit the various ways people are prone to waste time.
    22 Jan 2014, 10:19 PM Reply Like
  • kevinconway
    , contributor
    Comments (2754) | Send Message
     
    Productivity in the "developed" world is tanking...that is a massive problem when you are up against the very hungry countries in places like Asia, SA and soon (with the help of China) Africa. USA employees need a smack...focus...get in shape...get back to USA work ethic of the past...if not then the fast moving world will pass you by.....and tons of aps is NOT the solution.
    23 Jan 2014, 11:32 PM Reply Like
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