Research In Motion (RIM)’s shares were trading around $15 when Chief Executive of Fairfax Financial, Prem Watsa decided to purchase 14 million shares of this company back in January this year. After this deal, Watsa, who is respectfully known as “Canada’s Warren Buffet” looked the part of a fool rather than an investment expert because the months following his acquisition saw share prices fall considerably.
In July the price of RIM’s shares touched a low of $7. At that point in time instead of shaking in his boots or claiming defeat, Watsa decided to double their share holdings in RIM to 10 percent. As a result of this move, Fairfax financial became the biggest shareholder of the RIM, hitching his proverbial wagon to the wavering tech giant.
Many thought that this was the worst possible move at that time due in large part to the fact that RIM’s stock price slipped to just over $6 later that month, but Watsa, as the true greats do saw opportunity where others saw peril.
As Watsa explained that, “We’ve never seen a technology company with assets and talent of this calibre come down as cheap as the stock of this one has. This company has a tremendous brand name that is recognized worldwide. It has 78-million users, 56-million BlackBerry Messenger users, patents and a worldwide network.” Moreover, RIM has $2.2 billion in cash and no liabilities.
On top of it, Prem believe that, “the best investments are made at the point of maximum pessimism. We don’t know if RIM has reached that point, but we figure it’s pretty close”.Eventually things started to shape up well for both RIM and Prem after September, as several new features of Blackberry 10 received positive feedback from various tech analysts. In addition to this, numerous carriers also had a positive stance on the upcoming smartphone from this Waterloo-based company.
As a result of that RIM’s stock price started jumping upwards and after a long wait yesterday it managed to touch $12 mark. This super comeback from RIM has proved that Prem and Fairfax financial made a much better move that everyone save for Thorsten Heins thought. Now it is time for them to enjoy the dividends because as the launch date of BB10 draws near it is expected that the stock price of this Blackberry maker could touch $43 price, which would be a growth of more than 300 percent and a tremendous coup for Watsa.
Source: Tech Vibes
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