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Canadian investor Prem Watsa doubles down again on what was already a big investment in Research...

Canadian investor Prem Watsa doubles down again on what was already a big investment in Research In Motion (RIMM), as a filing shows his Fairfax Financial (FRFHF.PK) goes to 51.9M shares - worth about $351M, a 9.9% stake. Watsa figures RIMM's undervalued and recovery could take three to five years.
Comments (27)
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    AHhhhhhhh a sadomasochist. He loves the PAIN.
    23 Jul 2012, 09:15 AM Reply Like
  • bedrock65
    , contributor
    Comments (637) | Send Message
     
    It is always a good sign when insiders buy a boat loads of shares, earlier this year Lazaridis purchased another $50 million worth of shares.I think I value their investment decisions more than yours, given their billionaire status.
    23 Jul 2012, 09:25 AM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    Jeez I was just kidding, grow a sense of humor. He hasn't been right yet though but I'm sure every billionaire gets every investment move right...right?
    23 Jul 2012, 09:26 AM Reply Like
  • bedrock65
    , contributor
    Comments (637) | Send Message
     
    true it's not 100% certainty, my apologies.
    23 Jul 2012, 10:08 AM Reply Like
  • Nahodny Okoloiduci
    , contributor
    Comments (142) | Send Message
     
    you mean a masochist
    23 Jul 2012, 12:35 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8214) | Send Message
     
    Prem Watsa is a brilliant investor but just as Michael Jordan occasionally missed a dunk, Prem occasionally makes a horrible call.

     

    RIMM is a horrible call.

     

    He should just stick with the bonds.
    23 Jul 2012, 09:32 AM Reply Like
  • bedrock65
    , contributor
    Comments (637) | Send Message
     
    the only difference is he's an insider and that's positive
    23 Jul 2012, 10:06 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8214) | Send Message
     
    Insiders buy doomed stocks all of the time.

     

    Sometimes being on the inside blinds you to what is going on on the outside...
    23 Jul 2012, 11:47 AM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    He has a better view of where they are headed than any outside investor. However, I think the 6.00 point will be reached in August. There are too many macro-economic headwinds for shares to climb much before mid August.
    23 Jul 2012, 02:29 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    We can assess some of how good a call Prem makes with RIMM by his earlier RIMM call. Last Sept he must have bought in around $25, taking a 70%+ loss thus far. Who here has done that poorly in RIMM? He very well could be blinded by his involvement...
    23 Jul 2012, 05:14 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    In addition, Prem Watsa bought his stock earlier this month, so that could be around $7.50-$8.00, in fact the move up to $8 probably had to do with his buying, that much buying has to move the stock. So since his doubling down, he has lost an additional 11% on his initial investment AND his recent purchase...

     

    I guess if you have billions you don't have to care? Monopoly money I suppose, and it now gives him status as the largest shareholder by a large margin...perhaps this isn't about profit, but power...
    23 Jul 2012, 05:37 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3080) | Send Message
     
    In April he stated his time line was 3 to 4 years for his investment. He was also one of the few people to bet against housing and bring in substantial profits doing so. Only time will tell, though I still think he should've waited until August.
    23 Jul 2012, 05:41 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    I agree that from a money standpoint, he should have waited...maybe even until just prior to BB10 release sometime next year. It makes me think that it is more about influence at this point. Perhaps, now he will call the shots?
    23 Jul 2012, 05:57 PM Reply Like
  • galaxy travels inc.
    , contributor
    Comments (302) | Send Message
     
    @Odin.....I think you are on to something ...he is protecting his bad investment throwing good after bad....now trying to shore up sagging stock price with individual type buyback....
    23 Jul 2012, 06:00 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    @galaxy
    I am starting to wonder if he doesn't care about the money, he bought in last Sept, increased his holdings earlier this year, and then close to doubled down early this month. I think that he is taking back the board from the twin doodoo birds. That needs to be done, but I think he is a year and a half late in doing it. The momentum is not on his side, unless he wants to tear it apart and sell. If he liked the strategy of waiting for a BB10 revival, then he should have waited to buy in cheaper.
    23 Jul 2012, 06:14 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8214) | Send Message
     
    According to Forbes, Watsa's average cost for his 10% stake is ~$17 - $19 per share.

     

    So he is averaging about a 55% loss.

     

    That is terrible investing.

     

    He is very good but not with RIMM.
    23 Jul 2012, 07:00 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    Yes, even if they sold now, before the situation worsens, with the stock below $7, would someone pay enough to bring Prem to even? I have my doubts on that one. And, that is a lot of time, energy, and tied up capital just to break even. This one seems like a loser for him.
    23 Jul 2012, 07:10 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    Who is going to remember that there once was a stock called RIMM in 3 to 5 years? I wish RIMM good luck but just don't see what they can do.
    23 Jul 2012, 10:11 AM Reply Like
  • Tired_working
    , contributor
    Comments (6) | Send Message
     
    Ahhh...consider that he can see what is coming. Be it a buyout or new technology. He is on the inside and has access to info that the public sitting on the sidelines don't.
    $350m even for a billionaire is still heavy. I would bet he knows or has seen something. That's why people like him keep growing in wealth while the masses are always late to a party or just can't afford a shirt to go.
    Time will tell...to be continued
    23 Jul 2012, 01:28 PM Reply Like
  • Montreal9
    , contributor
    Comments (10) | Send Message
     
    RIMM is so far behind the competition they will never catch up. Watsa is playing with other peoples money. Kinda painless investing !!
    23 Jul 2012, 10:24 AM Reply Like
  • slickvguy
    , contributor
    Comments (498) | Send Message
     
    There are many reasons to think RIM will not make it - but this nonsensical "they are so far behind the competition" isn't one of them. First of all, being behind - or not even being a current competitor - doesn't mean much in the ever-changing tech world. How far was Apple behind the competition when they came out with the iphone? They weren't even in the game, yet they crushed RIM. They come and they go. That, in and of itself, is not a reason to predict total future failure. Second, RIM is not "so far behind". They are behind. Yes. They have been behind for far too long. I agree. But BB10 is certainly right up there with the competition. When it comes out, if it comes out in early 2013, it will NOT be "so far behind" iPhone5 and WP8 and Galaxy IV or whatever. It'll be current. That doesn't mean they'll recapture market share, but the technology itself will finally put RIM back at par (more or less) with their competitors. A full touchscreen BB10. Finally. It will probably have some features that are the most cutting-edge, from what I've seen, and depending on what the others put out, but that isn't critical. It'll put RIM's phones back at par with the competition. Then what will you say? Will it be impossible for people to choose RIM at that point? Will they still lose the loyal blackberry users? Very doubtful. Might some android users come back to blackberry at that point? Not possible? Of all those users, is it really impossible to imagine users coming back to blackberry as long as the phone is very good? You don't think a good percentage of users are fed up with iphone and android for various reasons?

     

    Yes, it should have been out a year ago. I agree. The delay has been horrible. But once BB10 is out, RIM does have a chance to grow again and do better in the future. No dreaming. No wishful thinking. Sure, it probably won't happen. But is there a good enough chance? YES, there is! Will they ever be what they once were? Probably not. But who knows? If they can use BB10 to stave off their demise, they can then change again in the future. Perhaps become just a software and/or servicing company? They'll have options. But first, they must put out BB10 asap and make sure it is fantastic. That's the first step *IF* there is to be a comeback of any kind for RIM. But to suggest it's too late just because they lost the last round badly flies in the face of reality. It is very much possible. I'm not saying it'll happen - just that it cannot be ruled out at all. They CAN do it. We'll see if they do or not.
    23 Jul 2012, 10:51 PM Reply Like
  • Superfly_FR
    , contributor
    Comments (321) | Send Message
     
    Averaging with confidence seems the most appropriate comment, isn't it? #staycalm
    23 Jul 2012, 12:53 PM Reply Like
  • galaxy travels inc.
    , contributor
    Comments (302) | Send Message
     
    he should've waited and got it at a better price,,,,,,,a couple months at least ............
    23 Jul 2012, 05:09 PM Reply Like
  • redwoodsman
    , contributor
    Comments (112) | Send Message
     
    He knows what he is doing,finally some support for the company.
    It will take less than 3-5 years to recover if the reports are correct,keep on guessing boys.
    23 Jul 2012, 05:58 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    Everyone not in possession of a time machine is guessing; but past is prologue, and things have not been well at Waterloo
    23 Jul 2012, 06:03 PM Reply Like
  • Luis Hernandez
    , contributor
    Comments (101) | Send Message
     
    Lets look at the facts:
    1. RIMM is trading slightly below Net Working Capital. This means it is a Net-Net/Cigar Butt stock. This is a good start.
    2. It is losing money but not cash (its cash flow positive).
    3. No debt and a lot of cash.
    4. Outside the U.S. (Latin America specially) business is doing fine.
    5. Patents and distribution have some kind of value.

     

    If it were liquidated TODAY, buying now would make money. The problem is that if they keep losing money the liquidation value diminishes over time.

     

    So basically the question is: are the loses going to stay and translate into cash burn? Or will RIMM be able to at least break-even and cash flow positive for the next 2-4 years and then liquidate and sell parts and generate more value in the process? One thing they could do is slash R&D and Capex to minimum levels. This would definitely bust FCF and earnings (with obvious long term negative effects), but there seems to be no "long term" for this company.

     

    It is definitely a really hard one to figure out. I would require a higher discount to NWC to go in, regardless of my huge respect for Prem and the Fairfax team.

     

    Luis Hernandez
    23 Jul 2012, 06:42 PM Reply Like
  • Odin.
    , contributor
    Comments (79) | Send Message
     
    Sounds like a sound balanced assessment Luis. The impression that Thorsten Heins gives is that he intends to play out the BB10 scenario, which could be quite a ways off before contributing to profits. In the meantime, I think avoiding cash burn will be difficult, which is probably why they took such deep, deep cuts to personnel. It seems that they are continuing to lose ground in enterprise and in N. America, including Canada. I think that the picture 6 months from now will look worse, not better.
    23 Jul 2012, 07:03 PM Reply Like
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