1. Superfly_FR's Avatar
    Hope it isn't already here ... rushing a bit ... sorry if it is

    Source : Cantech Letter, with the same title.
    In The Intelligent Investor, Ben Graham’s lauded 1949 book that popularized value investing, the author personifies the vagaries of the stock market in the form of a fictional character named “Mr. Market”.
    Mr. Market is not a very well-rounded character. In fact, he does little more than show up at a shareholder’s door every day offering to buy or sell shares in a fictional company. The price he offers varies from the wildly crazy to the somewhat plausible. The point of the character is that Graham felt value investors should learn to profit from the irrational behaviour of the stock market, rather than succumb to it.
    2011, to a large degree, was a tale of two different entities that shared the name Research in Motion. Research in Motion, the Waterloo-based mobile device giant, grew its revenue from $14.9 billion to $19.9 billion, while increasing earnings per share to $6.34 from $4.53. Research in Motion, the stock, was another story. On the TSX, RIM began 2011 at $58.07 and ended it at $14.80. In between was the botched launch of company’s BlackBerry PlayBook tablet, the delay of its new BlackBerry 10 operating system, and continued loss of market share in mobile devices to both Apple and Android.
    On November 3rd, shares of Research in Motion fell below book value for the first time in nine years. Book value, of course, is what you get when you add up a company’s assets, such as cash, real estate and inventories, and subtract its liabilities. At the end of Q2, which ended ended August 27, RIM had a book value of $18.92 a share. Funds such as Janus Capital Management, Brookside Capital Investors, and Greystone Managed Investments bailed. Even George Soros threw in the towel.


    But prior to November, Mr. Market was knocking on the doors of many of North American’s top value investors, and many of them were liking what he had to offer in Research in Motion. One of those men would later play a much larger role in the company, ultimately leading to the ousting of Mike Lazaridis and Jim Balsillie as co-CEOs, and his placement on the company’s board.
    In 2010, Prem Watsa held a small position in RIM, but throughout 2011 he aggressively added to it. At last check he owns 5.12% of the company, nearly as much as Balsillie or Lazaridis themselves. Watsa is often referred to as “Canada’s Warren Buffett” and the comparisons do have some grounding in reality. Watsa’s Fairfax Financial, an insurance company with direct investments in other insurance companies and a portfolio of bonds and common stocks, has an average annual return of 17.9% over the past decade. The S&P 500, meanwhile, has returned 1.4% per year in the same period. Fairfax was Canada’s most profitable corporation in 2008, and through moves that sometimes puzzled the general public, Watsa kept making money through the worst recession in a generation. Before the market collapse of 2008, Watsa used credit default swaps to bet against the US credit market. His $341 million bet returned more than $2 billion. Underscoring the Buffett comparison, Watsa even sits on the advisory board of the Ben Graham Centre for Value Investing at Western’s Ivey School of Business.


    In the quarter ended June 2011, The Yacktman Fund, an Austin, Texas based mutual-fund that bears the name of its founder, Donald Yacktman, and manages just under $9 billion, opened a new position in RIMM in the June 2011 quarter, with a $71 million purchase. Yacktman, who was voted Portfolio Manager of The Year by Morningstar in 1991, manages the $3.5 billion Yacktman Focused Fund, which has returned 242% over the past decade, and the larger Yacktman Fund, which has returned 213% over the same time frame. As of January 31st, Yacktman held more than 9.6 million shares of RIM.
    Late in November, Laszlo Birinyi of Birinyi Associates, a fund that returned nearly 18% in 2011, appeared on CNBC’s Squawk Box to unveil his top five picks for 2012. To the apparent surprise of the Squawk Box hosts, Birinyi was bullish on Research in Motion. He says the company has been beaten down, but has a brand and a loyal devotees. Birinyi recalled that he appeared on the 1997 year-end special of the late Louis Rukheyser’s Wall St. Week, where his top pick was beaten-down Apple Computer, which was trading at $7.
    Also in November, hedge-fund manager Leon Cooperman’s Omega Advisors, which manages about (US) $5.5 billion in assets, disclosed that it owned 1.425 million shares of RIM as of September 30th. Three months earlier the fund did not own RIM. After leaving Goldman Sachs, Cooperman started Omega Advisors in 1991. The fund has average an annual return of approximately 16% since.
    And John Hussman of Hussman Economtrics Advisors added a million shares of RIM to his holdings this past summer. The fund manager argued that “Unless we are looking at the end of BlackBerrys, Research In Motion, specifically at this price, is worth considering for a value investment.” Hussman had a little money kicking around for a global mobile device maker. Late last year, the fund manager sold his entire position in Apple.
    TheScionicMan likes this.
    02-16-12 01:26 PM
  2. Thunderbuck's Avatar
    I think these guys might be a little ahead of the curve, and global events might just overtake all of us.

    Even so, I think RIM actually IS a good buy right now. It looks like OS 2 is going to launch for the Playbook on schedule, and it sets the stage for an aggressive relaunch. It's going to take some time before we have reports back to confirm how effective this "rehab" strategy is proving, but I think there's a chance that we'll see something positive.
    02-16-12 02:20 PM
  3. Economist101's Avatar
    Hope it isn't already here ... rushing a bit ... sorry if it is

    Source : Cantech Letter, with the same title.
    RIMM is a fine stock if you're using discretionary funds.

    However, selling AAPL shares last year is nothing to be proud of; Apple is up $100 since closing at $403 on 12/30/2011.
    02-16-12 02:23 PM
  4. undone's Avatar
    RIMM is a fine stock if you're using discretionary funds.

    However, selling AAPL shares last year is nothing to be proud of; Apple is up $100 since closing at $403 on 12/30/2011.
    That would be only true if you didnt make an equal profit during the suggested time period.
    02-16-12 02:33 PM
  5. OMGitworks's Avatar
    That would be only true if you didnt make an equal profit during the suggested time period.
    I think that is a very safe assumption if you took your Apple sale proceeds and invested in RIMM, down 75% in the last year.... Or just about anything compared to RIMM....

    All of these "value" investors have taken a beating in their RIMM investments to date.
    02-16-12 02:52 PM
  6. anon1727506's Avatar
    I think that is a very safe assumption if you took your Apple sale proceeds and invested in RIMM, down 75% in the last year.... Or just about anything compared to RIMM....

    All of these "value" investors have taken a beating in their RIMM investments to date.
    Most of these "value" investors (scavengers) are purchasing at below the Book Value for RIMM, so worse case they would probably make a very small profit if the Company were to be sold for it's parts. But they have a "chance" to make a huge profit if they wait 18 - 24 months for BB10 to be release and given a chance to mature. (don't think BB10 release day will mean much for the Stock, will take time to see if everything comes together to attract NEW customers to BB).

    They only investors to take a beating were the ones that bought while it was over $20.
    02-16-12 04:48 PM
  7. OMGitworks's Avatar
    Most of these "value" investors (scavengers) are purchasing at below the Book Value for RIMM, so worse case they would probably make a very small profit if the Company were to be sold for it's parts. But they have a "chance" to make a huge profit if they wait 18 - 24 months for BB10 to be release and given a chance to mature. (don't think BB10 release day will mean much for the Stock, will take time to see if everything comes together to attract NEW customers to BB).

    They only investors to take a beating were the ones that bought while it was over $20.
    Cooperman, Watsa and a few of the others bought at prices above $50 and were forced to double down and now have cost averaged down but still have average share prices in the $25 range.

    Here is approx what Prem Watsa was in for from a previous post:
    So I checked Prem's RIMM investment from SEC quarterly records. I assume he accurately filed the required reports and they are public documents anyone can look at. He has taken a beating on RIMM.

    Round numbers here my brain hurts today. First 2 million shares reported last June, average price $50.19. Bought another 6.3 million shares at average price of $43.84. Bought last 3.5 million at average price of $26.78. He held 11,788,300 shares at an approximate cost of $473,564,350 with a market value today of $187,433,970. It is not hard to see why he wants on the board, he wants his $300,000,000 back.

    He since added more shares to these holding at the lower prices but you can see where his first $500M went. Cooperman, Hussman and Yachtman and anyone else who bought in mid 2011 would have been well north of $25 as well, maybe as high as $50.
    Last edited by OMGitworks; 02-16-12 at 06:42 PM. Reason: added quote
    02-16-12 06:25 PM
  8. joshueL's Avatar
    Thank you for sharing this.
    02-20-12 01:55 AM
  9. Rootbrian's Avatar
    I doubt somebody will buy our beloved canadian company and then rip it apart, sending 17,000+ on the streets or into the unemployment pool struggling to find jobs afterwards.

    I wouldn't want to see this happening. So I will take this as a grain of salt.
    02-20-12 09:59 AM
  10. anon1727506's Avatar
    I doubt somebody will buy our beloved canadian company and then rip it apart, sending 17,000+ on the streets or into the unemployment pool struggling to find jobs afterwards.

    I wouldn't want to see this happening. So I will take this as a grain of salt.
    Your right... Corporations are way to concerned with the "little guy" to ever do anything like that.
    02-20-12 10:15 AM
LINK TO POST COPIED TO CLIPBOARD