[Bacon Munchers]

A month to go...

... I often daydream about the KeyOne on bb10...

Then some jerk honks at me to go because the light is green.

[Corbu]

Google Names BlackBerry PRIV an Android Security Leader in Annual Report | Inside BlackBerry
Alex Thurber

[JonCBK]

Question for the traders. Are there really still large short positions for BBRY? Considering the price is low, there hasn't been much significant drop in years, and the company keeps being cash flow positive, where is the angle for a short player to make much money? As I understand it, taking a short position is akin to betting against the "house" because stocks, on average, rise. So a long position, on average taken across the market, tends to pay off and has over any decently long period of time (i.e., 10 years). Short players know this, so they must pick their targets carefully. What pick BBRY? Your upside (stock dropping from $8 to $6 (balance sheet, assets, not to mention brand and cash flow set a fairly solid floor)) is low, but your downside (stock rising from $8 to whatever) is high. And general trend on stocks is up. As I understand it, a short needs to identify a stock that the market has missed and which is going to crash in fairly short order. Otherwise the game is too risky with the odds stacked against you.

Now there are short positions in every stock. That is just part of hedging and it happens. But does BBRY still have an outsized short position relative to its market cap?

[DaSchwantz]

Jon...the quick answer, from what I can gather, is that shorts are riding the thesis that bbry revenues will shrink faster than costs going forward. Chen has started to dispel this thesis by convincing the market that margins will improve going forward, but there are still a predominance of shorts who don't believe what Chen says. Chen also has yet to convince the market that the revenue growth in the new areas has traction.

So yes bbry still has an outsized short position, but it'll be interesting to see how much it dropped after the last earnings report. Essentially neither the short nor long thesis has dominated the sp story over the last 3 years, but I do think (as Morgan said) that a corner has now been turned, where institutions no longer see bbry as 'too risky'. This alone will bring things back into balance over the next q or two, when the revenue story becomes a little more obvious.

[JonCBK]

Jon...the quick answer, from what I can gather, is that shorts are riding the thesis that bbry revenues will shrink faster than costs going forward. Chen has started to dispel this thesis by convincing the market that margins will improve going forward, but there are still a predominance of shorts who don't believe what Chen says. Chen also has yet to convince the market that the revenue growth in the new areas has traction.

So yes bbry still has an outsized short position, but it'll be interesting to see how much it dropped after the last earnings report. Essentially neither the short nor long thesis has dominated the sp story over the last 3 years, but I do think (as Morgan said) that a corner has now been turned, where institutions no longer see bbry as 'too risky'. This alone will bring things back into balance over the next q or two, when the revenue story becomes a little more obvious.

Thanks for the answer. Seems very risky to be short BBRY. I think I understand how service revenue will continue to drop and may in fact fall off a cliff when the last of the old Blackberries reach the end of their useful life (though I wonder if those replaceable batteries are extending their life significantly (spend $8 on a new battery and your phone can be back to lasting a really long time)). But still the software side of services is so high margin and the stock market rewards similar companies with high multiples that BBRY could get a lot of credit once the perception of the company shifts.

[kadakn01]

A slightly different perspective.
Their are some true short players like a Bill Ackmann shorting Herbalife as he thinks it is worthless and is a ponzi scheme, and that may have had similar shorts in BBRY, when it had 180M+ shares that were short in 2013, and had 5.9B in contractual obligations to nearly cause a BK if not for Prem Watsa. The shorts in TSLA look at the value in FORD and say TSLA is overvalued. However the majority of shorts in BBRY are really just a variety of hedge funds and some regular mutual funds that see a stock that has in addition to declining revenue, also much worse relative performance to a index (use NASDAQ or NASDAQ 100 trust -QQQ).
An example is a fund managed by Nuveen Asset management called Core Plus fund, which uses Quantitative analysis to determine about half of the positions, see below of the definition:

Quantitative analysis focuses on these trends, combining dozens of different factors to
create models that rank and sort companies based on such factors as valuation, growth
dynamics, profitability, capital deployment and earnings quality.

What this essentially means is that they believe by looking at mainly rear looking indicators, they can determine which stocks are less likely to outperform the index, and by contrast which ones are likely to outperform. In this case they would have been short a number of companies that in aggregate are up say 2% YTD vs. the S&P which is up say 5%, and long a number of companies they identified that are up 7% ytd, they win. They dont need the shorts to be negative, just under perform the index. This is where a majority of the money being allocated these days goes, because investors want a risk adjusted return. As BBRY starts to outperform on a ytd, 1 year, etc, look for momentum investors to cover as well,
Momentum investing entails investing in securities that have had above-average returns and shorting securities that have had below-average returns.

While this may be too simplistic, recently the simple reality is when BBRY starts to outperform the index like it has ytd, they will begin to cover. That in essence requires pateince, as they are not going to cover after one quarter of earnings, it may take a few to get them to both potentially cover and then actually also go long, in effect a double purchase. Most of the top shareholders with perhaps the exception of Renaissance Technologies the hedge fund run by Jim Simmons (a black box quant fund) are really fundamental value investors like Iridan asset management, a spinoff of First Eagle asset management, a stock picking value fund, or Prime cap, more a GARP type (growth at a reasonable price), that are looking at the value of QNX, RADAR etc, and not concerned with declining revenue as they see ultimate value in these business.

Most of the hedge funds we have spoken to are waiting for top line growth, and waiting for GAAP earnings to take shape, as the NON GAAP has allowed them to "massage" the numbers to look better than they are. Write offs and hence impairment charges imply they overpaid for assets. See below for a complaint of the current environment. In the case of BBRY under John chen, it is more of the transition to SW, from HW, and hence a reallocation of money to growth areas and selling off assets that are not needed, like the data centers, even at a loss.

Adjusted earnings typically exclude certain expenses, charges or gains that are required under GAAP standards (the most common being stock-based compensation, amortization of intangible assets, and charges related to asset impairment or restructuring). Company managements argue that adjusted earnings can give investors a more accurate snapshot of underlying operating performance. But as adjusted earnings are almost always higher than GAAP earnings, critics worry that managements may be massaging the numbers to create a rosier picture than the fundamentals warrant.
This long-simmering debate has reached a boiling point in recent months, as the gulf between GAAP and non-GAAP earnings has gotten too big to ignore. In 2015, about 87% of companies in the S&P 500 reported adjusted earnings, up from 73% in 2010. And the median size of the adjustment increased from 8% in 2010 to 25% in 2015. In aggregate, reported GAAP earnings were almost 22% below adjusted earnings last year. Overall, there has been a sizeable increase in both the frequency and the magnitude of the adjustments.
There have been two typical responses to this state of affairs. One has been to see this as a signal that stocks may be overpriced, since “true” GAAP earnings are so much lower than the flattering numbers managements would rather have investors focus on. Another is to treat it as an early sign of a possible recession, on the theory that deteriorating conditions at the end of a business cycle might prompt companies to do more window-dressing.


Here is a great piece on the many types of hedge funds for some nice weekend reading! There are so many (and the past few years they have mostly under performed the mkt btw, take that FWIW!

https://www.hedgefundresearch.com/si...ifications.pdf

The bottom line is the majority of the short sellers in BBRY, are not listening to John Chen's earnings call or interviews! However, they will all start to cover this year as the price performance and profitability increase.

[bspence87]

A slightly different perspective.

Great Post! I just learned so much. Makes perfect sense. It seems like there is potential for a massive squeeze, with the double-buy lined up.

Some simple numbers:
Chen calling for software growth of 15-18%. Let's aim low with 15. Puts revenue at $430million, an increase of $56million. Even if SAF falls by 20% ($56million), we break even. If we go 18% growth($ 67million), we can afford for SAF to fall by 22%

At this point, we have no reason not to believe software growth will outgrow SAF declines.

Posted via CB10

[Corbu]

OT:
What is "brain hacking"? Tech insiders on why you should care - CBS News

[rarsen]

Hoping smart people are choosing robust security software, from a company with a proven record -- hint, hint, if not it could get very messy!

The mobile payments industry is booming — outside the US
https://ca.finance.yahoo.com/news/mo...140755825.html
Kilb, of Boloro, is convinced mobile payments will hit a hockey-stick moment and take off rapidly. “I think it will be relatively quick at some point,” he says, “just like mobile phone adoption was very quick once the phone became small and affordable.”
China and India are spurring that moment more than America is, for now.

[morganplus8]

Thought I would post a chart of the 3-minute trading movement for the past few days:



We doubled topped last Tuesday at $ 8.20/shr during the day and sold off on an over-bought challenge. We were too high on the B-Bands (outside them) and RSI was above 70. All of that has corrected itself and now we are trying to find a trade-able bottom. When the bottom is found, the stock will rally above the downtrend line and we are on our way.

There were some great comments on hedging, shorting of the stock etc., nice reading. I mentioned some time ago that the "pairs trade" of long AAPL and short BBRY actually didn't work from the time that Apple launched their iPhone 5 in late Sept 2013. Of the following 31 months past the launch of that phone, when I subsequently made my claim, the pairs trade worked for only 8 of them. Back then, the stock held a much higher short position because there was far more potential to the downside. Today, it is a different story with the stock at its bottom and now Chen is in a position to surprise us with positive news at any moment. I wouldn't want to be short this stock without a hedge of some sort.

As for BBRY, I would like to see it do exactly what it did at the double top and perform a "key-reversal" down here and close positive on the day. Best of luck.

[rarsen]

Bit of positive analyst information:

Surging Earnings Estimates Signal Good News for BlackBerry (BBRY) - Nasdaq.com
"So investors may definitely want to consider this Zacks Rank #3 (Hold) stock to profit in the near future."

[Corbu]

SEC targets fake stock news on financial websites | Reuters

The U.S. Securities and Exchange Commission on Monday announced a crackdown on alleged stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Twenty-seven individuals and entities, including a Hollywood actress, were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.

The SEC said many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks.

It said it found more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

"This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on a conference call.

"Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."

...

+ this
http://www.zerohedge.com/news/2017-0...alpha-benzinga
SEC Targets Seeking Alpha, Benzinga In Crack Down On "Fake News" Pump And Dumps

[Corbu]

BlackBerry Developer Summit Europe | BlackBerry Developer Blog

[cjcampbell]

Thought I would post a chart of the 3-minute trading movement for the past few days:



We doubled topped last Tuesday at $ 8.20/shr during the day and sold off on an over-bought challenge. We were too high on the B-Bands (outside them) and RSI was above 70. All of that has corrected itself and now we are trying to find a trade-able bottom. When the bottom is found, the stock will rally above the downtrend line and we are on our way.

There were some great comments on hedging, shorting of the stock etc., nice reading. I mentioned some time ago that the "pairs trade" of long AAPL and short BBRY actually didn't work from the time that Apple launched their iPhone 5 in late Sept 2013. Of the following 31 months past the launch of that phone, when I subsequently made my claim, the pairs trade worked for only 8 of them. Back then, the stock held a much higher short position because there was far more potential to the downside. Today, it is a different story with the stock at its bottom and now Chen is in a position to surprise us with positive news at any moment. I wouldn't want to be short this stock without a hedge of some sort.

As for BBRY, I would like to see it do exactly what it did at the double top and perform a "key-reversal" down here and close positive on the day. Best of luck.

Curiosity.... What made you switch to tradingview from your traditional standard of stockcharts? I've used both, and prefer tradingview due to free, free, real-time intraday, and free. Lol

[rarsen]

General Security information. Before I was indecisive, now I don’t know... Seems to me security technology is not equally developed out there, also many very naive people giving much reasons to remain careful as not every brand/OS is equally robust:

That Fingerprint Sensor on Your Phone Is Not as Safe as You Think
https://mobile.nytimes.com/2017/04/1....html?referer=
In computer simulations, the researchers from the universities were able to develop a set of artificial “MasterPrints” that could match real prints similar to those used by phones as much as 65 percent of the time. “If all I want to do is take your phone and use your Apple Pay to buy stuff, if I can get into 1 in 10 phones, that’s not bad odds.”
Full human fingerprints are difficult to falsify, but the finger scanners on phones are so small that they read only partial fingerprints. Phone makers could easily increase security by making it harder to match the partial fingerprint, he said, “but the average phone company is more worried about you being annoyed that you have to put your finger against the phone two or three times than they are with someone breaking into it.”

Goodbye, Password. Banks Opt to Scan Fingers and Faces Instead.
https://mobile.nytimes.com/2016/06/2...s-instead.html

[morganplus8]

Curiosity.... What made you switch to tradingview from your traditional standard of stockcharts? I've used both, and prefer tradingview due to free, free, real-time intraday, and free. Lol

Hi CJ !

I never would have posted using Clearview if there was some action from either you or JLagoon! I use stockwatch, stockcharts and the proprietary charts of my trading service too. As you pointed out, Clearview is a free real-time charting service that allows you to watch your favourite stocks in real time, for price action, to see the latest news, but more importantly, to see your chart continuously update automatically in whatever time-frame you desire. You know this already but others might be interested in watching not only the chart updating itself in real-time, but you get a great sense of the bid/ask on the stock in real time too.

For instance, today as has been the case since we started to sell-off here, the "ask" volume far exceeds the "buy" volume so you know we are heading down until that balances out. I posted a chart to respond to comments that the stock wasn't strong when in fact, it was racing to $ 8.20/shr as fast as it could take out the offerings on the "ask" side. The last few days it has been the reverse. Now we are trying to find a bottom here and if everyone used this chart, setup the same way, we would all be looking at why the stock is trading the way it is now.

I much prefer to have you or JLagoon post short-term charts to the board but your WiFi at the Yacht Club must not be very reliable! Ha!

I use Clearview just for BBRY, it sits in the corner of a 50" screen and I can see the real-time volume challenge from a distance. I wish the display was sharper on their part, more definition would give it a better look, other than that, it's an awesome short term chart service.

[Corbu]

BlackBerry eyes fresh start in China as software company | South China Morning Post

Thanks, S!

[morganplus8]

We hit rock bottom today at our former resistance level of the past and climbed all afternoon causing a reversal so now its time to go higher. AH is looking interesting too. News?

[Corbu]

None that I can see so far.

Fewer than 40k traded AH.

Short numbers out: stay about the same.
http://www.nasdaq.com/symbol/bbry/short-interest

[cjcampbell]

Wow. Huge news. BBRY awarded over $815 million from Qualcomm.

[Merboy6969]

We hit rock bottom today at our former resistance level of the past and climbed all afternoon causing a reversal so now its time to go higher. AH is looking interesting too. News?

http://www.cnbc.com/2017/04/12/black...-qualcomm.html

Looks like you were right Morgan.

[Corbu]

BlackBerry Awarded U.S. $814,868,350.00 in Arbitration Against Qualcomm

WATERLOO, ONTARIO--(Marketwired - April 12, 2017) - BlackBerry Limited (NASDAQ:BBRY)(TSX:BB) announced today a binding interim arbitration decision awarding BlackBerry $814,868,350.00 in royalty overpayments made to Qualcomm Incorporated. A final award including interest and reasonable attorneys' fees will be issued after a hearing on May 30, 2017.

On April 20, 2016, BlackBerry and Qualcomm entered into an agreement to arbitrate a dispute regarding whether Qualcomm's agreement to cap certain royalties applied to payments made by BlackBerry under a license agreement between the parties. The binding arbitration hearing was held in San Diego, California from February 27, 2017 to March 3, 2017 under Judicial Arbitration and Mediation Services rules. BlackBerry was represented by Sullivan & Cromwell LLP in the proceeding.

"BlackBerry and Qualcomm have a longstanding relationship and continue to be valued technology partners," said John Chen, Executive Chairman and CEO of BlackBerry. "We are pleased the arbitration panel ruled in our favor and look forward to collaborating with Qualcomm in security for ASICs and solutions for the automotive industry."

[rampagingpanda]

Holy cow, quite the unexpected news..

[_dimi_]

Kaboooommmmm!!!!

Posted via CB10

[world traveler and former ceo]

Is this finally the catalyst that triggers Short squeeze?.. Hmmm, where's that popcorn....

Posted via CB10